Sizing up the Bitcoin ETFs

How many coins are going to be captured by the spot Bitcoin ETFs?

Unless the SEC manages once more to weasel out approving those spot Bitcoin ETFs, we will get one sometime in 2024.

What kind of impact they will have on Bitcoin depends on a many factors: 

• When is the launch?

• What’s the state of the US economy at that time?

• Is the Federal Reserve printing cash again? 

We can’t control any of these. And that’s not even the full list. 

But what we can do is size up the Bitcoin ETFs market. That’s going to give us some idea of what is realistic and what isn’t.

So let’s do that?

Shout-out to https://twitter.com/Z06Z07 who inspired this note with a question on X/Twitter.

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Sizing up the Bitcoin ETFs

The takeaway

The Grayscale Bitcoin Trust is as close as it gets to a spot Bitcoin ETF. And it also happens to be the largest ETF-like product around by an order of magnitude.

That means we can ask how hard it is to replicate GBTC today and what kind of impact that would have on Bitcoin’s price. 

The answer is:

• It would be tough. 

• But if it happens at the same time as Bitcoins are hard to come by the price increase would be substantial.

• Unfortunately the amount of cash it would take for this to happen isn’t unlikely to appear overnight.

• So we should have more moderate expectations as to what the ETFs can do for Bitcoin in the short term.

Now let’s start back and see how we come to this conclusion.

What is the existing landscape of ETF like products?