Ecoinometrics - Is it worth betting on the Bitcoin stocks?
Let’s build a framework to think about investing in the stocks highly correlated to Bitcoin.
There are lots of ways to get exposure to Bitcoin. The most direct way is to buy spot BTC or some derivatives. The least direct way is to buy correlated assets.
The Bitcoin stocks very much fall into the category of correlated assets.
Now the good news is that those stocks got hammered in this bear market. That means they are cheap. But still, are they a better deal than buying Bitcoin directly. Let’s try to figure this out.
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Done? Thanks! That’s great! Now let’s dive in.
Is it worth betting on the Bitcoin stocks?
Before we start let me get something straight. If you want to have exposure to Bitcoin the easiest way to do so is buy spot BTC and ideally self custody it.
Anything else is a derivative or a correlated asset. Which means there is no guarantee they will track Bitcoin's moves in direction and amplitude.
“So why would I bother betting on Bitcoin stocks?” is what you are probably wondering right now.
Good question.
Let’s put aside the case where you can only get exposure to Bitcoin through stocks for regulatory reasons.
The idea is that you are making a bet correlated to Bitcoin with a different risk / reward profile. And maybe under some conditions this correlated bet is a more favourable trade than buying Bitcoin outright.
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