₿ Is The Spot Bitcoin ETF “Priced In”?

What’s on the Menu 🍴

This week could be HUGE for bitcoin…

And since it was the best performing asset of 2023 (and the past decade), we’re here to help you navigate the wild and fun seas of crypto.

Also, earnings season is kicking off for stocks!

We’ve got a video breakdown of technical analysis for the S&P 500, and macro economic data you don’t want to miss.

So, here’s what you need to know this week:

• So, Is The Spot Bitcoin ETF “Priced In”? ₿

• What to Watch This Week 👀

• Market Anticipates Historic ETF Decision 😬

• 2024 Stock Market Analysis 📺

Today’s newsletter is a 5 minute read.

So, Is The Spot Bitcoin ETF “Priced In”? ₿

As we mentioned above, investors are patiently waiting to see if the SEC is going to officially approve a spot Bitcoin ETF (backed by ACTUAL Bitcoin held in custody vs. BITO which is backed by futures contracts).

Multiple big firms are attempting to get approval from BlackRock to Wisdom Tree, to Grayscale.

This is leading to many people asking the question “Is The BTC ETF approval priced into Bitcoin?”

It’s a good question with a lot of considerations.

First, a rundown of how the Spot Bitcoin ETF will actually work.

1. Seed capital is deposited and then Bitcoin can be purchased.

   

   iShares Bitcoin Trust S-1

   From the S-1: “The Trust intends to purchase bitcoin with the proceeds of the Seed Creation Basket using the Prime Execution Agent prior to the listing of the Shares on NASDAQ.]”

2. From here, new shares are created when large firms like JP Morgan or Morgan Stanley act as “authorized participants” delivering Bitcoin in exchange for ETF shares.

3. Retail investors, firms and investment advisors have an easy and liquid way of getting Bitcoin exposure via the spot ETF. It’s as easy to buy as a stock share or any other ETF. The shares are backed by the Bitcoin held.

   

   iShares Bitcoin Trust S-1

The initial Bitcoin to seed the ETF may or may not have been purchased already as it stands today (it’s noted above that they’ll buy the Bitcoin “prior to the listing of the shares on the NASDAQ”.

So, this could be a driver of prices to run higher in Bitcoin as these coins get purchased before the listings are live.

But, on the flip side, the seed capital is low in relation to actual Bitcoin trading volume, so, the launch of these ETFs may not move the needle on price as much as everyone thinks.

Bitcoin does billions of dollars worth of trading volume a day.

So, Bitcoin is able to absorb the volume pretty easily.

What will really matter is inflows and demand from launch!

It’s more likely the excitement ETF approvals bring to investors is what may move the needle. Short-term traders may also contribute to this.

But, can it last?

Back to the trading volume of Bitcoin, and how it can absorb demand:

The largest ETF category is equities, and in November 2023, equity ETFs had roughly 77 billion of net inflows. That averages out to 2-3 billion dollars a day on average.

So, looking at a couple of billion a day of inflows in Bitcoin (which may or may not happen), the trading volume on average largely surpasses this. So again, it can be absorbed.

Granted, we can have trading volume be high, and prices still go up.

After all, it’s about what price investors are willing to buy, and sellers are willing to sell that drives markets.

So, could excitement alone drive price in the beginning?

Yes.

But eventually, when price discovery is done after the event, we’re likely to see price trend as normal, even with more Bitcoin being purchased to deliver to ETF providers as inflows happen.

Either way, this will help legitimize cryptocurrencies like Bitcoin in a big way. It’ll help build more trust with financial advisors, everyday investors and other financial firms.

As Bitcoin continues to be the best performing asset class over it’s short time alive, the ETFs are an exciting opportunity to be a part of it in an easier way.

What to Watch This Week 👀

Buckle up because we have an action packed week ahead in financial markets!

Media reports suggest that spot Bitcoin ETFs will receive SEC approval this week, which could lead to big moves in crypto prices and some stocks as well.

We also have large global banks like JP Morgan, Bank of America, and Citigroup kicking off the Q4 earnings reporting season on Friday.

Interestingly, Q4 earning estimates in aggregate have fallen by almost 7% in the past three months, suggesting growth expectations were too high entering Q4:

We’ll have to see how the numbers play out this month and into February.

The key CPI & PPI inflation reports will also be released on Thursday & Friday in the US.

In addition, there will be inflation data released in China and retail sales data in Europe.

If that wasn’t enough, there’s also several major conferences being held this week including:

• Consumer Electronics Show (CES)

• JP Morgan Healthcare conference

• ICR retail conference

Many companies will be presenting at these conferences so we could see financial updates, M&A announcements, or product releases this week.

We’ve seen interest rates tick up and tech stocks fall in the first week of the year, reversing some of the moves witnessed at the end of 2023.

It looks plenty healthy to us for now, but we’ll keep an eye on the following assets & sectors this week:

📈 Rising Recently

• Crypto (BTC / ETH / GBTC / WGMI)

• Energy (XLE / XOP) & Natural Gas (UNG)

• Health Care (XLV)

• Cannabis (MSOS)

• Biotech (XBI)

📉 Falling Recently

• Nasdaq & Tech stocks (QQQ)

• Semiconductors (SOXX)

• Solar & Alternative Energy (TAN)

• Retail (XRT)

• Gold & Miners (GLD / GDX / GDXJ)

Market Anticipates Historic ETF Decision 😬

This week's got the crypto crowd buzzing with anticipation, and all eyes are on the SEC's verdict on the much-awaited spot Bitcoin ETF.

Rumor mills hint we might just see a green light as early as midweek. After all, the markets seem to have bounced back, brushing off whispers of another postponement.

So, what's the game plan for what might be a pivotal chapter in crypto's saga?

Let's break down the possible plays:

1. If ETF Gets Approved: Don't pop the champagne just yet!

An approval doesn't mean immediate action. There's usually a lag of a month or two before these ETFs strut onto the trading floor.

Also, consider this: The market's been riding a wave of optimism since October, setting the stage for a potential "sell-the-news" scenario.

Prices might spike post-announcement, but a cool-down period could follow suit.

2. ETF Gets the Boot: If the SEC gives a thumbs down, expect a knee-jerk plummet.

But, here's the twist: Major players might just counter with legal fireworks, reigniting the "when ETF" drama.

And let's not forget, we're in a Bitcoin Halving year - historically a bullish beacon.

So, while the immediate fallout might be grim, the long-term prospects still shimmer with promise.

One thing's for sure – strap in for a rollercoaster ride of high volatility this week!

Keep your wits about you; whether we're toasting to success or bracing for impact, volatility is the only guarantee.

📺 Video of the Day:
2024 Stock Market Analysis

2023 was the year of the anticipated market crash and recession.

This is leading a lot of people wondering if 2024 is going to be the big year for assets to free fall.

In today’s video, Nikki outlines her 2024 stock market predictions. She covers:

1. Technical analysis and where she thinks the market will head to next.

2. A dive into if the stock market is worth buying at the current valuation

3. If a recession is expected to come in 2024… and more!

Delicious Bites 😋

• Jobs increasing for Gen Z

• Microsoft poised to overtake Apple as most valuable company

• Soda Taxes Cut Sugary Drink Sales By 33%

• Wallet developer offers bounty daring hackers to take $430K BTC

Food For Thought 🧠

"The successful warrior is the average man, with laser-like focus.”
- Bruce Lee

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.