Money/inflation, the Fed, Banking, Monetary Policy, Dollar, BTC, crypto, Gold

[ya]

Yes, its going to be very volatile. Anything is possible. BTC approval is near certain and the ETF's will start working a few days after that. 2024 is going to be great...

[Crafty_Dog]

WWWOOOFFF!!!

[ya]

[ya]

D-day

[ya]

I will be posting a series of BTC related posts tonight, should anyone be interested.

[ya]

BTC vs BTC ETF

ETF Holding the ETF is preferred by the "average" person. All the security hassles are gone, no need to worry about losing your coins and you get the price appreciation of BTC.

BTC Holding BTC is preferred by those who like to hold the coins themselves, it gives you sovereignty. You can go to a different country if you so choose, you can easily cross borders with your coins etc. The govt cannot easily get your coins and there are many countries where BTC can be used as legal tender EL Salvador and Argentina, certain parts of Switzerland, Spain etc.

Custody of BTC This can be complex for non-technical people, even using the most simple wallet like Trezor. It gets exponentially difficult using the most secure wallet, eg Coldcard. The big problem with self custody is that one needs to store the keys securely and there is no 1-800-Bitcoin if you make an error. The money is gone for ever.

An intermediate solution is that you can store BTC in the vault of any of the major US exchanges. This takes away the concerns about losing keys etc. This is different than leaving coins on the exchange (aka hot wallet), which is susceptible to hacking. The downside of storing BTC in the exchange vaults is that theoretically the govt/IRS can put a lien on your acct for any reason, or they could decide to confiscate the coins like they did with gold some decades ago.

[ya]

GBTC, ETF or BTC For educational purposes only, I cannot predict the future, nor do I have any finance training!, so pl. do your own research.

GBTC  In my opinion, holding GBTC is not advisable over the long term (> 1-2 years). Their fees are 1.5 % at the moment. The problem with GBTC is that if you sell to take your money out, you will incur a taxable event. So if it is a long term gain, you might have to pay 15-20 % tax + any state taxes, + the 1.5% fee. So think carefully. If its a short term capital gain, it may not be worth taking out the money until it becomes a long term gain.

ETF vs BTC is discussed above. BlackRock, Fidelity, Ark/21, Vaneck in this order are reasonable ETF choices. These 11 ETF's hold trillions in Assets under Management. Over the next several months the biggest marketing blitz that you have ever seen will be unleashed and they are all competing for your attention and funds.

So tomorrow when the markets open, the institutions will compete amongst themselves. If you have capital to deploy through ACH via an exchange, buy the BTC tonight before market open, for once the exchange opens the ETF's go live, this will impact BTC price. Many exchanges, eg Coinbase allow you to purchase BTC up to a certain limit using ACH even though the transfer is not instant (with the caveat you cant withdraw until the money is transferred).

If you want to buy the ETF, its going to be wild and no one knows what will happen. I personally would wait for a pullback before buying, but note that a significant pullback may not occur for weeks.

[ya]

Hopium/Price Predictions No crystal ball here, so please do your own research.

Over the next year 2024-2025, I expect BTC to peak, if it follows prior patterns. To me 120 K is the minimum, 200K is likely, but 500K is possible.
Be careful about investing too much in BTC, for it can comedown equally hard, 70-80 % drawdowns are very possible.
So far, anyone who has held BTC for a full 4 years cycle, has not been at a loss,  it becomes very painful to hold BTC when it goes down. For optimal returns one needs to hold through 2 cycles (i.e. 8 years).

Good luck everyone. Key message: Dont over invest. Most people might consider 1-5 % of a portfolio as BTC if you are near retirement age, or your risk profile allows. One could go much higher, if your risk tolerance is higher, or eg you are in your 30's and you have time to recover.

[ya]

Here's the SEC's Gary Gensler

[ya]

One more thing why this cycle is super bullish. This is the first time that BTC will undergo a double shock. A demand shock, from the millions of new investors, pension funds, family offices etc who were unable to buy BTC directly, but now they can. This combined with a supply shock where the BTC supply goes down 50 % in April due to the halving.

So demand goes up and supply goes down, which is an explosive combo.

Eagerly waiting for tommorow to see which way the market goes, I think it goes up...

[Crafty_Dog]

https://www.barrons.com/articles/bitcoin-etf-ticker-price-cost-availability-fees-dbfa774a?st=exvcu5orrvmkj4j&reflink=article_email_share


Bitcoin ETFs Are Here. Everything You Need to Know About Them.
By
Joe Light
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Jan 10, 2024, 5:55 pm EST


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In this article
BTCUSD
BLK
GBTC
HOOD
COIN
The Securities and Exchange Commission on Wednesday approved the launch of the first spot Bitcoin
BTCUSD

1.06%
 exchange-traded funds.

SEC Chair Gary Gensler said the approval didn’t equate to an endorsement of Bitcoin, which he said was “a speculative, volatile asset.”

Still, Bitcoin believers say the new funds will bring tens of billions of dollars into digital assets, as financial advisors and other institutional investors for the first time get access to the largest crypto inside a familiar wrapper. For retail investors, the new ETFs could make buying Bitcoin easier, cheaper, and safer—in some ways.

As the ETFs launch, here’s what investors need to know.

When Will Bitcoin ETFs Be Available?
Approving the ETFs to come to market was a two-step process. First, the SEC authorized exchanges like the New York Stock Exchange and Nasdaq to list the ETFs’ shares. Soon after, the SEC approved the prospectuses submitted by each issuer. With those sign-offs in place, most if not all of the funds could start trading on Thursday.

What Are the Costs of the Bitcoin ETFs?
With around a dozen issuers seeking to launch spot Bitcoin ETFs at the same time, investors always knew the fee competition would be fierce. But the Bitcoin ETF race has exceeded expectations.

The lowest fee appearing in a fund prospectus so far comes from Bitwise Asset Management, which says it will charge a 0.2% annual expense ratio for its fund. A fund sponsored by ARK Invest and 21Shares will have a 0.21% fee, while VanEck, BlackRock
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-0.27%
 and Fidelity come in at 0.25%.

In addition, some issuers including Bitwise, ARK/21Shares, and Invesco plan to waive their fees completely for six months for the first $1 billion to $5 billion in assets under management.

The most expensive fund for now appears to be the Grayscale Bitcoin Trust
GBTC

3.84%
, which is already trading but plans to convert into an ETF. Right now, the fund, which has an expense ratio of 2%, trades like a closed-end trust with a price that deviates from that of its assets. Grayscale in a filing said that when the $27 billion fund converts, it plans to charge a 1.5% annual fee. For traders moving into and out of Bitcoin rapidly, Grayscale’s fund might still be a good option, since its high asset level will likely make it more liquid and with tighter bid-ask spreads out of the gate.

All of the funds could change their fees before or soon after launch, and some of the issuers have already reduced their fees in filings even before their debut.

What Are the Advantages of a Bitcoin ETF Over Holding Actual Bitcoin?
The main ones are cost and convenience.

Small investors on many trading platforms buying Bitcoin sometimes have to pay fees and spreads that exceed 1% of their purchase. Since many stock platforms including Robinhood Markets
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-0.49%
 and Fidelity have zero commission trades, buying a Bitcoin ETF can be much cheaper.

In addition, using an ETF is more convenient for many investors. Rather than open a separate account on Coinbase
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-0.46%
 to specifically buy Bitcoin, an investor can keep his or her Bitcoin holdings in the same account as other holdings. They don’t have to worry about losing passwords or fraud that in the crypto world has often resulted in the permanent loss of investments.

The ETFs can likely be held in retirement accounts for investors worried about capital-gains taxes. Of course, any capital losses in retirement accounts won’t help their tax bills either.

The issues with holding Bitcoin in separate accounts have been serious enough to scare away many institutional investors and financial advisors. Now the fund companies are betting that the creation of Bitcoin ETFs will bring in billions of dollars in new capital.

Write to Joe Light at joe.light@barrons.com

[ya]

1 whole BTC is now becoming increasingly unaffordable for most people. Infact, by the end of this year 1 BTC will be unaffordable to most. People will need to start thinking in satoshis. 1 BTC=100 million satoshis. Its a bit like, buying gold, one does not need to buy a kg of gold, you can buy it in small ounces and fractions of ounces. This is where the ETF's come in, they remove unit bias. Investors will be buying 1/1000th of a whole BTC (my estimate, to be determined).

See the BlackRock ETF Price


Below are some factors which will impact BTC (collated from Twitter).
ETF ad campaigns: Super Bowl ads coming, as well as a barrage of high quality ads
Nation-state adoption : Jan3 CEO has been working on nation state adoption of BTC. Small nations are looking into it.
The Halving: This decreases supply by 50 %, come April
Veblen Effect: BTC gets more desirable as the price increases, BTC is a veblen good.
118x Multiplier: The exact multiplier is unknown, but each $ in BTC multiplies the price by an X factor, Bank of America said its 118!.
Recursive Demand Shock™
Low $BTC supply on exchanges
Max Pain Theory
Renewed QE: Fed may ease rates or increase liquidity in 2024
FASB: This is an accounting standard change, which allows companies to hold BTC and account for taxes in a simpler way. This is HUGE.

[ya]

[Crafty_Dog]

Bitcoin’s $29 Billion Hotel California
Grayscale Bitcoin Trust could retain investor money despite its higher fee
By
Telis Demos
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Jan. 11, 2024 8:00 am ET




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Grayscale Investments CEO Michael Sonnenshein PHOTO: JEENAH MOON/BLOOMBERG NEWS
“You can check out any time you like, but you can never leave” might be an apt analogy to illustrate what is going on with what is set to be the largest, newly-minted bitcoin exchange-traded fund.

With a series of openings expected Thursday, those who want to invest directly in the cryptocurrency in the form of a U.S. spot ETF will suddenly have many options. But before this big bang, there was really just one direct vehicle in the U.S. market: Grayscale Bitcoin Trust, which uses the ticker GBTC.

That helped GBTC to grow to an enormous size, nearly $29 billion, even before the Securities and Exchange Commission finally approved its “up-listing” from an over-the-counter stock into a listed ETF, in which shares can be readily created or redeemed—enabling it once and for all to close the big gap at which it has usually traded to the value of its underlying bitcoin. At that size, it would be the second-largest commodity ETF in the U.S. market, behind SPDR Gold Shares GLD 0.44%increase; green up pointing triangle, according to ETF.com data.

As the biggest game in town for a long time, GBTC could charge a healthy 2% fee. But even before the new bitcoin ETFs were approved, the mere prospect of them launched an intense price war. Some providers have already lowered their proposed fees. Some will have promotional rates or waived fees for a period or up to a certain size.

Feb. 2023
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Grayscale Bitcoin Trust
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Even the nonpromotional fees are relatively low. Several, including BlackRock’s BLK 0.76%increase; green up pointing triangle iShares Bitcoin Trust, have filed for fees under 0.3%. The average commodity ETF has an expense ratio of 0.42%, according to VettaFi, a provider of ETF analytics.

GBTC is slashing its fee, too. But only to 1.5%.

Is Grayscale trying to put itself out of business? Hardly. While the ETF market is hypercompetitive, with many investors focused on fees, they aren’t the sole consideration. GBTC already having tens of billions in assets puts it in a unique position.

Most notably, those who own GBTC in taxable accounts and are considering switching to a cheaper ETF will have to weigh those savings versus the possible capital-gains tax hit of selling GBTC. And those bills could be hefty: If you had bought GBTC a year ago, back when it was trading at a huge discount to bitcoin, you would be sitting on gains of over 300%.

There are also different audiences for ETFs. For financial advisers, like the ones served by the vast distribution and marketing networks of BlackRock or Fidelity Investments, the fee might be a huge factor. But for an institution planning on large trades, things like liquidity and bid-offer spreads might be key. And being the biggest bitcoin ETF can drive advantages on those measures.

Take the well-established gold ETF market. SPDR Gold Shares is the largest gold ETF. But its sponsor fee of 0.4% is above that of the second largest, iShares Gold Trust IAU 0.42%increase; green up pointing triangle, at 0.25%. Other gold ETFs are even lower.

SHARE YOUR THOUGHTS
Will the holders of Grayscale Bitcoin Trust’s ETF stick with it? Why or why not? Join the conversation below.

The lesson is that if bitcoin ETFs are the vast market force proponents hope for, the battle might be long and complicated. ETFs in other markets come in many flavors: There are ETFs that hold less of an underlying asset per share to trade at a lower price, increasing their appeal to some investors. ETFs can also come in leveraged or short varieties.

Whether the SEC will approve those versions of spot bitcoin ETFs remains to be seen, of course. Chair Gary Gensler pointedly didn’t endorse bitcoin, saying in a statement that “investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.” Legally, though, many future approvals might have to follow, with the SEC having arguably backed itself into a corner with its initial batch of approvals.

So for those already exhausted by the saga of spot bitcoin ETFs, be prepared for a lot more to come.

Write to Telis Demos at Telis.Demos@wsj.com

[ya]

From X
'Almost everyone expected #Bitcoin to either rip, or to sell off on the ETF news. But BTC managed to deceive almost everyone, once again. 👇

What’s behind the muted price response?

Turns out that compliance departments at brokerage firms often take weeks to several months to add new products to their internal “approved products list” for advisors to sell.

In addition, several large broker dealers including  Citi, Vanguard, UBS and Merrill Lynch have either restricted or disallowed their retail clients to buy any spot Bitcoin ETFs. There may be other brokers who blocked these sales as well for ideological reasons. They don’t believe in Bitcoin. I didn’t expect this at all. They’ll lose customers quickly with this strategy.

There are also reports of people rotating out of bitcoin ETF proxies, like BITO and mining stocks, in order to redeploy that capital into a better proxy, like any of the spot ETFs. That would also mildly suppress the amount of ETF inflows.

This may take several months to sort out before the floodgates open. I hope this is the case, as I need to stack more! We all do."

This pattern is similar to what happened with Gold ETF, the first few months were slow/down before it went on a tear. There is also a lot of people with egg on their face, or very salty like Gensler, Eliz Warren, Jamie Dimon etc which affects the policies of banks etc. Those who were hoping to buy the ETF are lucky to have this extra time to stack sats.

Having said that, BTC did touch 49K yesterday...

[ya]

First day stats 4.7 Billion, but a lot of cross traffic. GBTC losing some customers, which went to ETF etc.

[ya]

Great discussion on BTC and real estate. BTC 164 episode

https://link.chtbl.com/BTC164

[ya]

From X

"When the dollar collapses, a #Bitcoin ETF will entitle the holder to infinite cash, not bitcoin."

I personally dont expect the $ to crash for the next 7-8 years.

[ya]

From X

"$GBTC (1119 shares=1BTC) was trading at a roughly 1% discount day 1

$IBIT (1775 shares=1BTC) was trading at a roughly 2% premium day 1

Trading to chase a fee reduction at this point locked in a net loss in BTC. Not worth it till the gap closes."

[ya]

BTC compared to the biggies, SPY and QQQ Very commendable for Day 1 !!

[ya]

BTC is taking off in Africa too. Most are focussed only on S America

[ya]

BlackRock wants you to read the below

[ya]

Enjoy the Big Idea from Cathy Wood, CEO of Ark, she has BTC ETF

https://twitter.com/i/status/1745441714481811886

[Crafty_Dog]

This a good moment for me to move out of GBTC to ________ (which one do you recommend for me?)?

[ya]

BlackRock or Fidelity are the leaders. You may want to read about the costs of ETF's.

The major benefit of ETF's is that self custody is not required. That allows the benefit of BTC price appreciation without incurring the risk of loss due to poor custody.

Self custody of BTC gives you sovereignty, but the downside is that custody is a bit involved. You have to worry about storing the keys and requires some technical ability. No 1-800-Bitcoin is available in case of error.

https://substack.com/inbox/post/140616320

[ya]

Grayscale lost money yesterday, 95 mill exit, but in the scheme of things a small number

[ya]

Jeff Ross Vailshirecap is advising clients as follows

[ya]

Just saying

[ya]

[ya]

BR and Fidelity in the lead

[ya]

[ya]

Samson Mow CEO of Jan3 a company which focusses on selling nation state adoption, posted some interesting numbers.

900 new BTC are mined daily. In two days BlackRock purchased over 11,000 BTC (13 days worth). If one considers all the ETF's together, he presented stats suggesting that the exchanges which provide these BTC over the counter in many cases have about 1.8 million BTC, the rest are in the hands of hodlers.

What this means is that at current buying rates all these 1.8 million BTC will be drained in about 120 days, just in time for the halving. If this is true, a huge demand shock, combined with a supply shock is coming since holdlers are not going to sell cheaply.

My strong suggestion to holders of BTC is to have a game plan, based on your risk tolerance and time horizon. Once BTC is in the parabolic stage, it is easy to sell early. If your age allows, dont sell everything but hold for one or more cycles, unless you plan to hold on longer for your grand kids.

[Crafty_Dog]

Much gratitude for your keeping us in the loop YA!!!

[ya]

BR marketing BTC to boomers. Clean shaven..nice guy

https://twitter.com/i/status/1746539470491447585

[ya]

[ya]

Eric Balchunas from Bloomberg on BTC ETF's.

"Let me put into context how insane $10b in volume is in first 3 days. There were 500 ETFs launched in 2023. Today, they did a COMBINED $450m in volume. The best one did $45m. And many have had months to get going. $IBIT (BlackRock) alone is seeing more activity than the entire '23 Freshman (ETF) Class".

[ccp]

https://www.dailywire.com/news/the-eye-popping-interest-payment-spike-on-our-national-debt

congratulations DC.

[ya]

The US has only 3 options.
1. Default on debt: Not likely to happen.
2. Cut spending massively. Not going to happen
3. Increase taxes: Wont work, because as taxes increase, capital flees and you end up with less tax revenue.

So the most likely solution is Print Baby Print...printer goes brrr, afterall we own the reserve currency.

[Body-by-Guinness]

An accurate, in my estimation, pessimism where state sponsored digital currencies are involved:

https://newsfromuncibal.substack.com/p/not-everything-is-bad-but-everything

[ya]

Trump has recently said he wont support a CBDC. Several states eg FL have passed anti CBDC legislation. My guess is that Europe and other countries will move to a true CBDC, while the US may opt for a CBDC lite for big banks only. The risks to the $ from a retail CBDC are substantial and Americans are more focussed on privacy etc.

[ya]

In the meantime, the BTC ETF's are now the #2 commodity ETF and have surpassed silver ETF. The current downdraft in BTC is temporary after the 100 % + run last year. Its mostly due to GBTC sales, at some point these sales will subside and the bull run continues. As can be seen in the last column 37946 were sold from GBTC and 30,496 were purchased by ETF's. Both BlackRock and Fidelity each hold over 1 Billion in BTC assets.

Another important observation is that from 1/10-1/17 the daily purchases of BTC by BR (25,067 BTC) and Fidelity (20,507) are still increasing and have not yet topped out. Compare this with the 900 BTC which are mined daily (supply) and this too will reduce to 450 BTC mined/day after April. Absolute scarcity is coming this year and in the next several years. Also of note, GBTC sales are trending down, albeit slowly.

[ya]

Here's a chart of the BTC supply schedule. the columns to watch are the Decimal(BTC) and the Date column. It can be seen that since 2020 the miners are mining about 6.25 BTC every 10 min, or 900 BTC/day. In 3 months that reward becomes half, i.e they get only 3.125 BTC/10 min, or 450 BTC day. This is a very limited new supply to be shared with the whole world, by 2028 the supply completely shrivels up, to 225 BTC/day. In other words there is very little new supply, its like Gold mining stops, the only gold that is available is already with Central Banks/Retail. For comparison, currently US ETF's are buying (demand) about 10,000 BTC/day. Furthermore, between 2028-2140 a period of 112 years the last 3 % of all BTC will be mined, i.e. there is literally no new BTC being mined.

Folks dont realize that when the price of Gold goes up, mining activity increases (supply) since there is still a ton of gold underground. With BTC there is absolute scarcity, the number of total coins cannot be increased. Not many understand the above school level math !, but by the time they do, BTC will be much higher.

[ya]

Something we havent discussed about is UTXO (Unspent Transaction Outputs) management for those who buy BTC and self custody. Essentially each batch of BTC that one buys is  like a dollar bill, eg 1 $, 5 $, 20$ etc. To spend each $ bill, one needs to pay fees. Thus to spend 26$, one would pay fees 3 times, for each of the $ bills (1, 5, 20) Until recently, the fees were miniscule on the main block chain, but now they are rising such that small dollar denomination purchases cannot be cashed because the fees are higher than the $ bill value.

Currently, its still Ok to cash higher amounts of BTC purchases, say a few thousand $ at a time, but a 10 $ worth BTC purchase would be difficult to cash. But as BTC gets more valuable eg 100,000$ plus, I expect fees to increase, so it becomes necessary to convert your 26$ in 3 different bills to a single bill worth $26, so that the fees are paid only once.

Due to these complexities, I am starting to think that holding BTC in ETF's might be the easier and better option than holding BTC for most people. The price appreciation (minus the fee) is the same, but the risks/complexities of holding BTC are greatly decreased. Holding BTC gives you sovereignty, makes your coins unconfiscatable and ability to cross borders with your money. This may not be important or relevant to most.

[ya]

https://cryptopotato.com/bitcoin-etf-vs-buying-btc-directly-whats-better/

[ya]

BTC makes sudden moves and then goes sideways to down. It pays to be in the market

[ccp]

Ya,

Since the big banks are in ETF now does that hamper decentralization?

Partly centralized and decentralized in your view.

ccp

[ya]

Decentralization usually refers to protocol running by nodes, the risk being that the protocol can be changed. Thats not a concern. There are 10's of thousands of nodes world wide. There is also the concept of game theory, so eg Russia and China are not likely to agree with the US should a govt try to ban BTC etc and vice versa. Infact calculations have been presented that BTC can no longer be banned. Centralization of wealth in BTC is theoretically possible, but very unlikely.  People would need to sell their coin to the ETF's and they might do it for a high price.

In 2024 or 2025, I think sovereign nation states will start purchasing BTC. They typically do that in assets worth a Trill $ or more.

You can see how the coins are distributed here.

https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html

[ya]

Good to remember..BTC is  volatile, but becoming less volatile. When BTC reaches a few hundred K in market cap, volatility will decrease further.

[ya]

GBTC sales have mostly been Sam Bankman Fried scam, forced sales. These are ending. The surprising thing is that the ETF's are still taking in a lot of BTC. The new supply after the halving is very limited and any purchases will have to be done from existing BTC on exchanges since the hodlers are not selling.

[ya]

Good read on BTC

https://www.forbes.com/sites/theapothecary/2024/01/24/the-secs-bitcoin-etf-approvals-have-forever-altered-the-global-monetary-system/?sh=6593494964b1