Hey Everyone!
THANK YOU to everyone who read and listened to yesterday’s letter, another record…. 1600+ podcast downloads…
I’m honestly honored….
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So what do I think is the #1 Bitcoin Rocket Fuel?
Honestly, it’s easy, and you don’t need to be a rocket scientist.
ETF’s.
For those that don’t know, and ETF is basically a stock.
Just like Apple, Google, Tesla, etc, sort of.
However, instead of tracking the value of a company, an ETF is designed to track the value of some sort of asset or basket of assets/companies.
In this case, it will be tracking Bitcoin.
Real quick, let me explain why people are excited about these incoming ETF’s, and I’ll also explain why they are still UNDERESTIMATING their impact at the same time.
1) There are a TON of applications filed and it seems like many will be approved.
Consensus Understanding ->
Here are all the applications for Bitcoin ETF’s in the United States…
Fidelity
Goldman Sachs (not a direct ETF, slightly confusing structure)
SkyBridge
Morgan Stanley
NYDIG
VanEck
Valkyrie
WisdomTree
Bitwise
As you can see, there are a TON of huge names in the running for these ETF’s.
PEOPLE ARE UNDERESTIMATING -> Many will likely get approved at the same time.
It seems unlikely that the SEC will approve only one of these, and thus grant a monopoly to any one ETF. There will be many approved, which only improves the flow of money into the space……
Speaking of flow of money…..
2) A RIDICULOUS amount of money wants access to Bitcoin, but can’t get it.
First off, for those that don’t know.
An ETF is by far the easiest way to get money into Bitcoin, for MANY of the people that want it.
Bitcoin is still a new, alternative asset.
Thus, many of the more traditional companies (think your parent’s insurance company) still aren’t able to buy Bitcoin, even if they wanted to, due to their charters.
However, an ETF THROWS OPEN THE FLOODGATES, and allows them to buy something that is traded on the public market, just as easily as if they were buying Apple stock….
The effect of this is going to be massive.
PEOPLE ARE UNDERESTIMATING ->
A) What happened with Gold will likely happen with Bitcoin.
On November 18, 2004, State Street Corporation launched SPDR Gold Shares (NYSE: GLD), which surpassed $1 billion in assets within its first three trading days. As of 2019, it was the largest gold-backed ETF in the world and it had more than $40 billion in assets and $1.7 billion in daily trading volume.[7]
The Gold price on November 18, 2004? -> $444 an ounce.
Today? -> $1,736 an ounce
This is due in large part to capital flows that came in through these Gold ETFs.
ONE SEC, I WILL COME BACK TO GOLD FOR MY MOST BULLISH NEWS AT THE END.
B) It’s not like we don’t already know that there is demand…. (Canadian Bitcoin ETF’s)
We already know that these USA ETF’s are going to pop off.
Why?
Because Canada already launched a couple a few months ago, and they went CRAZY.
This tweet puts it perfectly.
C) Michael Saylor already proved there is ridiculous demand for these products….
Remember way back when (like 6 months ago)..
When big dog Michael Saylor offered 600 Million in CONVERTIBLE DEBT to people, in order to buy Bitcoin?
Basically turning Microstrategy (his company) into a quasi ETF?
Yeah, I do too.
Remember what happened?
It got OVERSUBSCRIBED, to 1 BILLION DOLLARS.
And here’s the kicker.
This was at a 0% (yes you read that right) interest rate.
Big companies were SO EXCITED to pump money into Bitcoin, in any way possible, that they were willing to loan Saylor money at 0% to do so.
And you still think a Bitcoin ETF won’t blow the doors off things?
3) The BIGGEST UNDERESTIMATION. What happens when you attach an ETF to a PROVABLY SCARCE ASSET?
I told you I’d come back to the gold ETF’s.
It’s so fascinating, because while the ETF’s have been good for the gold price overall, they have also been great for MANIPULATION.
JP Morgan Chase, among MANY others, have been famous for paying insane fines year after year for manipulating the Gold market.
How are they doing this?
Now, disclaimer, I’m not a Gold expert, but my understanding is that it’s much easier to manipulate because there are PAPER CLAIMS to the GOLD.
Now stay with me here.
Gold is heavy, hard to transport, and needs to be verified and stored in vaults.
So, naturally, it’s easier to just make sheets of paper (or digital ETF tokens) that say “You own X amount of Gold”.
But my question is, what happens when human nature kicks in?
Do we really know how much Gold there is, anywhere? Much less in each individual vault?
Do we really know that Gold is Gold, and not just copper covered in Gold foil?
When you have such VAGUE understanding of what is actually backing something up, that’s when it’s able to be easily manipulated.
ENTER, BITCOIN.
This is the first time in all of history that ETF’s (basically a giant funnel for all the World’s money) are being created around something that is 100% SCARCE, and we can PROVE IT AT ALL TIMES.
There won’t be a question of how much Bitcoin there is.
There’s 21 Million. Period.
That simple fact is why I think everyone is underestimating the impact of these ETF’s.
It’s like filling up a pool for your backyard.
You could use a hose (current situation).
Or, you could use 10 FIREHOSES (when these ETF’s get approved).
Which one do you think will fill faster?
And the craziest thing is….
No one is going to be expanding the pool underneath you at the same time….
That’s what has happened in Gold, and why it isn’t a good representation of the magnitude of change that will happen here.
There is ONE POOL, and a LOT of water trying to get into it.
All I can say is HOLD ON FOR DEAR LIFE.
It’s going to be a wild ride.
See you subscribers next week, I’ll write more Bitcoin articles if you subscribe, otherwise I’m just going to write about something super boring..
Kale
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