I suggest you sign up for the newsletter. I disagree with the libertarian bankless ideology, but their enthusiasm is a very good source of information. This time there was this:
Last week we saw Visa announce it’s using Ethereum to settle USDC transfers on its network. We also saw Goldman Sachs scrambling to enable Bitcoin offerings to its customers in an attempt to match Morgan Stanley’s new Bitcoin funds.
Every week there’s more evidence that the institutions are building on crypto.
That announcement is huge. So you’ll be able to just buy COIN as a stock and you’ll hold direct crypto assets. Sure, it’s a stablecoin, which is a bit crap to begin with. But it will help with mainstream adoption.
And as per the Binance graphic above, people can now buy a Tesla with Bitcoin, Paypal and Visa are adopting crypto and everybody is very excited about Fidelity’s crypto ETF for some reason. I’ll be honest that I don’t understand why people have been waiting for that. I watched some older videos and I noticed it coming up quite a few times, as in we don’t have a crypto ETF and that’s bad. But everybody pretends like they know why that is. Let’s fucking google it.
- A bitcoin ETF mimics the price of the digital currency, allowing investors to buy into the ETF without trading bitcoin itself.
- Investing in a bitcoin ETF cuts out any issues of complex storage and security procedures required of cryptocurrency investors.
- The Securities and Exchange Commission hasn’t approved any digital currency ETFs.
Why Not Just Invest in Bitcoin?
If a bitcoin ETF merely mirrors the price of the cryptocurrency itself, why bother with the middle man? Why not just invest in bitcoin directly? There are several reasons for this. First, as indicated above, investors don’t have to bother with the security procedures associated with holding bitcoin and other cryptocurrencies. Further, there is no need to deal with cryptocurrency exchanges in the process—investors can just buy and sell the ETF through traditional exchanges and markets.
There is another crucial benefit to focusing on a bitcoin ETF rather than on bitcoin itself. Because the ETF is an investment vehicle, investors would be able to short sell shares of the ETF if they believe the price of bitcoin will go down in the future. This is not something that can be done in the traditional cryptocurrency market.
Important: You can short sell bitcoin ETF shares if you believe the price of the underlying asset will go down—an advantage you won’t find by investing in bitcoin itself.
Perhaps most importantly, though, ETFs are much better understood across the investment world than cryptocurrencies, even as digital coins and tokens become increasingly popular. An investor looking to get involved in the digital currency could focus on trading a vehicle they already understand instead of having to learn the ins and outs of something seemingly complicated.
Right. So, yeah, it does feel like a big step. Boomers will have access to direct crypto holdings instead of indirect, like owning Tesla or Microstrategy for example. They’ll be able to just buy COIN or the upcoming ETF and they’ll be able to short it, meaning make a bet against the BTC price, hoping it will go down.
Okay, that’s good. It’s good to be mainstream, not just us nerds and cryptopunks. Bankless mentioned another major aspect, regarding Ethereum this time.
The Soon (the ETH effect)…
All the while something big is happening in the background. I think ETH is about to flex its muscles and have the bull run it has long deserved. Let’s zoom in on ETH.
EIP 1559 is approved and slated for inclusion. This means that Ethereum fee burning begins in July. The significance of a DeFi enabled deflationary store-of-value asset has even elevated Ethereum to the front-page of Bloomberg.
Not only this but some core Ethereum developers are tossing around the possibility of accelerating the ETH 1 <> Beacon Chain merge to before the end of the year.
Why? Because it’s ready. At least this is what Justin Drake and a number of Ethereum developers seem to be indicating.
The ‘merge’ is where Proof of Work formally dies and Ethereum is 100% secured by Proof of Stake. ETH issuance drops from 4.75M ETH per year to less than 1M ETH per year and ETH as ultra sound money takes full form.
These fundamental economic improvements as well as a building narrative will lead to an institutional bull run for ETH. We’re already seeing early evidence of this too.
DeFi resonates with traditional investors. Matt Hougan from Bitwise recently discussed why this is the case on State of the Nation.
Well, if the news about Ethereum 2.0 being ready are true, then I have to change my mind about it. I still hold some Ethereum and I have staked in 2.0 through Binance. It’s my secondary crypto investment, nowhere near the money I’ve put in in Bitcoin but a significant percentage.
I’d love to see the issues with Ethereum go away, the insane fees, the deflationary aspect that might bump up the price. I’m not sure I like the proof of stake, since I won’t be able to mine Ethereum with my GFX, and I was hoping for at least a year of it before the upgrade. But I’ll be able to stake my Ether, so I guess it’s the same thing without power costs and burning up my graphics card. Also, I’ll still be able to mine altcoins to convert to satoshis, and they might just be less profitable.
All in all, big things are happening, the foundation is moving and shaking and we’ll see how it all works out in the end. It kinda feels like a good time to invest in crypto right now, don’t you think? Especially before 14th of April.