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After a decade of twists and turns, the U.S. Securities and Exchange Commission (SEC) finally approved the listing of Bitcoin spot ETF on January 10, 2024. In just three days, the Bitcoin spot ETF attracted a significant amount of funds, sparking widespread discussions. We believe that the listing of the Bitcoin spot ETF will help increase trading activity, liquidity, improve the pricing system, and reduce the entry threshold for overseas qualified investors in Bitcoin investment.
We compared overseas Bitcoin investment-related assets from the perspectives of trading costs, convenience, liquidity, and security, including primary markets (direct trading of Bitcoin or Bitcoin futures) and secondary markets (Bitcoin spot ETFs and Bitcoin futures ETFs). The conclusion is that secondary markets have higher security, lower trading costs, and more convenient portfolio management than primary markets. Among them, Bitcoin spot ETFs have lower fees than futures ETFs. The largest Bitcoin ETF in terms of AUM is Grayscale's GBTC, with a total AUM of $2.86 billion, exceeding the largest Bitcoin futures ETF's AUM of $2.28 billion.
Bitcoin is expected to experience three positive factors in 2024: halving, the rise of the Bitcoin ecosystem, and expectations of a Fed interest rate cut. 1) Bitcoin miner rewards halve every four years, and during the six months following the first three halvings, the price of Bitcoin has significantly increased. The fourth halving is expected in April this year. 2) After the launch of Ordinals (a digital content encoding method based on Bitcoin) in December 2022, the Ordinals user community has grown rapidly, leading to numerous new and old protocols on the chain, driving the strong development of the Bitcoin ecosystem, and pushing Bitcoin transaction fees to exceed Ethereum's for the first time in six years. 3) Federal Reserve Board members predict that the actual GDP growth rate in the United States in 2024 will be 1.4%, and the federal funds rate will be 4.6% (compared to 5.4% in 2023). A rate cut may lead to an increase in the supply of the U.S. dollar and its depreciation, potentially resulting in increased demand for Bitcoin due to its inflation-resistant effect.
The approval of the Bitcoin spot ETF also has an impact on the stock prices of relevant overseas-listed companies, primarily mining companies, trading platforms, and holding companies. The business model of mining companies can be summarized as "early investment-later harvest." As the Bitcoin ecosystem matures and trading volume grows, early investments gradually dilute, and later profits become stable or increase. Trading platform revenue comes from transaction commissions, exhibiting the characteristics of "water sellers," with leading trading platforms establishing competitive barriers through scale advantages. Early-stage holding companies purchase large amounts of Bitcoin at relatively low costs and enjoy capital gains. |
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Post time 6-2-2024 21:20:34