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Well, now we know...
Saturday October 21st, 2023 - Issue # 52
(Any views expressed below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)
Now we know the Bitcoin ETF approval is not priced in.
Last Friday’s news that the SEC will not appeal a recent court ruling that found it was wrong to reject an application from Grayscale Investments to create a spot bitcoin exchange-traded fund (ETF) seemingly fell on deaf ears. While our team celebrated, and I personally bought more BTC, the price barely moved on what should’ve been a major catalyst for a honkin’ green candle.
But let's be honest, uncertainty isn’t the right word for it, it’s a sh** show out there. According to my Twitter feed, we’re either in World War 3 or on the brink of it. The US is fiscally dominated and taking on debt faster than the average Canadian — just this week U.S. Treasury Secretary Janet Yellen said the country can “absolutely” afford to financially support both Israel and Ukraine in their respective war efforts.
Just the other week I posted a snapshot of the US debt clock — here is what it looked like the morning of the 6th:
Here it is this morning:
$200 billion??? Madness. Fun fact to put it in perspective: by most accounts, the Great Financial Crisis 2008-09 bailouts totalled around $500 billion.
So with all of the above+ considered, maybe a spot Bitcoin ETF approval won’t move the needle as much as we hoped it would. I mean, I guess so right because the SEC deciding not to appeal is a pretty big tell that it’s coming.
…kidding. On Monday, no-longer-reputable crypto news source Cointelegraph confirmed the SEC approved the iShares BlackRock Bitcoin ETF and we got confirmation that the approval was never priced in and that it would be a major catalyst for a move up. Bitcoin instantly jumped from $27k to $29.9k before cratering minutes later when it was confirmed that it was fake news.
So on Monday, we learned:
market eagerly anticipates an ETF
clear skies to the upside — liquidity on the way up is thin
exchanges liquidation engines are well oiled (100M+ short and long positions were liquidated in the move)
don’t be quick to trust anything you see on Twitter…oops, I mean X
Since then, Bitcoin has ground higher and has fully recovered and then some as we sit today over $30k or $41k in canuck bucks. You would think everyone would be talking about it and crypto twitter would be celebrating but this is the quietest I can remember it ever being. I’m reminded of the move up from ~$10k-$20k (previous cycle’s all time high). No one really cared in between, but once the ATH was broken, people started talking about it again and the price moved quicker and quicker. If it plays out the same this time around, we’ve got some time and a lot of room to grind higher until the market believes in the move and starts to pile in.
The ETF approval is one thing, but I think most folks aren’t appreciating it fully yet.
Fund companies like BlackRock, Invesco, ARK, etc, etc. have massive, well trained sales teams that are going to hit the street selling the crap out of these funds — especially if the market gets super hot. Before getting into crypto, I worked in sales at Fidelity Investments. I still know folks there, and they would love to see BTC pull away from everything else so that they can sell a hot product.
Even if sales people aren’t selling the Bitcoin ETF fund companies will add Bitcoin exposure via their own ETFs to growth and balanced portfolios.
The “global investing giant” in the headline above is Fidelity Investments but just their Canadian arm which is miniscule compared to Fidelity in the US, BlackRock, and pretty much every other reputable US investment management company. These allocations will add up big time and I’m surprised no one is talking about it.
These trillion dollar+ AUM Fund shops have way bigger budgets and way more power and influence than every crypto company combined x a jillion. The marketing campaigns are going to be incredible and again, no one is even talking about this.
Another catalyst quickly approaching is Argentina’s election tomorrow.
Presidential Candidate, economist, and bitcoiner, Javier Milei who won the primary election a few months ago is in the lead. If he were to win, we’d get another revolutionary shake up in the world order. We’ve already seen what great things someone like Bukele has done for El Salvador and we might get to see something very special happen on a much bigger scale with Argentina.
Yesterday was a busy day for us at the desk and for the first time in nearly two years, it feels like a switch has been turned on and we’re ready to start a new cycle.
Legendary Hedge Fund Manager, Paul Tudor Jones seems to agree.
Oh, and congrats to the King of Michael’s - Mr. Saylor who is now back in the money. What a legend.
Enjoy the rest of your weekend!