Bitcoin ETFs: winners and losers
Also BTC vs ETH decoupling or not and the US economy in presidential election year
Welcome to the Friday edition of the Ecoinometrics newsletter.
Every week we bring you the three most important charts on the topics of macroeconomics, Bitcoin and digital assets.
Today we'll cover:
Bitcoin ETFs: winners and losers
BTC vs ETH: decoupling or no decoupling?
GDP during US presidential election years
Each topic comes with a small explanation and one big chart. So let’s dive in.
In case you missed it, here are the other topics we covered this week:
If you aren’t subscribed yet, hit the subscribe button, to receive this email every week directly in your inbox:
The Bitcoin ETFs: winners and losers
The Bitcoin ETFs are almost one month old. If you exclude Grayscale, which has to deal with its legacy structure as a trust, those products have attracted a good amount of interest.
But with ten ETFs obviously not all of them can be winners.
Grayscale has been bleeding coins. I guess you can label them as losers. Still even with billions of outflows they remain bigger than any other fund out there.
The real winners are BlackRock and Fidelity with a strong growth and already a big scale. Together they hold as many coins as GBTC lost.
But maybe the losers are the funds that are failing to attract a lot of inflows. After all this whole business is based on reaching the largest scale that you can.
The world runs on power laws, so I would not be surprised if only a few of those ETF products end up capturing all the value.
BTC vs ETH: decoupling or no decoupling?
Here is something new (maybe). Bitcoin and Ethereum are getting less correlated.
Now it isn't a real decoupling. I mean we went from something like an 85% correlation score down to like 70%.
But that's the lowest this correlation score has been for a long time.
Why is it important? Well it is important because at this point whether you are trading Bitcoin or Ethereum doesn't matter much given how strong they are correlated.
Yes Ethereum grows faster during bull markets. Yes Bitcoin holds better during bear markets. But that's about it if we are talking purely about the price action.
If there is a real decoupling between those two we'll have way more trading options in the crypto market.
But we aren't there yet.
GDP during US presidential election years
If you are a long time reader you know that I've been pointing at the risk of a recession for a while.
The US economy is highly reliant on debt to grow. That means you'd expect businesses to have a very hard time with the high interest rates following the Fed's QT sequence.
But that has been going on for more than a year. And so far I've been worried for nothing. It doesn't mean we won't get a recession. But the timing I expected isn't playing out.
Now people have put another reason for why we won’t get a recession this year. The reason is that 2024 is a US presidential election year. So it is in the interest of the people in power to have the economy running smoothly.
If you are like me, you are probably wondering if that's true historically.
Well here is the answer.
On the chart below each point represents the (change in the) Real GDP of the US for a year. The years are split in two groups: election year and no election year.
Check it out.
So actually it seems election years don't prevent downturns.
With 70 years of data we have 4 negative years that are not election years and 3 negative years that are election years.
Considering that elections only happen every four years that's not a great record.
Politicians can only do so much to prop up the economy apparently.
That’s it for today. I hope you enjoyed this. We’ll be back next week with more charts.
Cheers,
Nick
P.S. We spend the entire week, countless hours really, doing research, exploring data, surveying emerging trends, looking at charts and making infographics.
Our objective? Deliver to you the most important insights in macroeconomics, Bitcoin and digital assets.
Armed with those insights you can make better investment decisions.
Are you a serious investor? Do you want to get the big picture to get on the big trades? Then click on the button below.
What is the worst-case scenario for holding an ETF that eventually proves to be a "loser?" Convince me to trade BITB for IBIT in my IRA.