Why Bitcoin's Spot ETF Approval is a Big deal

01/31/2024

Here at 360 Mining, we’re excited about 2024 - we’ve got big plans and as it turns out, Bitcoin does too. 2024 will be the pivotal year where Bitcoin matures from a niche tool for techies to a globally traded asset with real-world intrinsic value.

Before we can explain the changing public perception around Bitcoin, let’s first examine 2023, and why Bitcoin outperformed all other asset classes.

• In early March, Bitcoin’s price bottomed out at $19k as the dust from FTX’s fraudulent implosion finally settled

• Within that same month, Bitcoin’s value jumped 47% to $28k where it more or less remained until October

• In December, Bitcoin’s price surpassed $44k, the highest it traded since April 2022

So why did Bitcoin see such a strong rebound in 2023? The jump was, in large part, fueled by the market’s bullish anticipation of institutional adoption. After all, the SEC was nearing its deadline to provide a verdict on the 10+ proposals for a Bitcoin Spot ETF. On January 10th of this year the SEC finally issued the sweeping approval the market had been waiting for.

With this approval, Bitcoin matured into an institutional grade asset accessible by the masses. So why is this bullish for Bitcoin and why are investors, asset managers and institutions so excited? We can sum it up in three points:

Access: While Bitcoin may have been appealing for quite some time, it was widely regarded as hard to access. With the ETF, investors can easily gain exposure to Bitcoin through a traditional brokerage account, no different to purchasing a stock. Now that retail investors, asset managers and institutions can readily access Bitcoin through the ETF products, we expect to see billions of dollars flow into the asset class. Because Bitcoin is limited in its supply, an increase in demand for Bitcoin will lead to an increase in Bitcoin’s price.

Guardrails: After the collapse of FTX and other crypto-related blow-ups, many investors have shied away from the asset class. The perceived lack of protection for investors and the overall complexity of self-custody kept inflows into Bitcoin limited. With Bitcoin Spot ETFs, investors have new protections guaranteed by institutions like Blackrock and Fidelity that significantly limit the risk of investing in Bitcoin. These new guardrails help more conservative investors overcome a key objection to Bitcoin and will further contribute to net new flows of capital into Bitcoin.

Perception: Perhaps most important of all is the SEC’s stamp of approval combined with the caliber of institutions issuing the Bitcoin Spot ETFs. Blackrock, Fidelity, Ark and others are now competing to earn AUM into each of their respective products. This will result in an all-out marketing blitz to get their products in the hands of every investor, money manager, pension fund, etc. The weight of the SEC’s approval combined with collective marketing efforts of the ETF issuers will shift the perception of Bitcoin as a force for good, with real-world utility and value. Remember, there are 4x as many millionaires on Earth than there will ever be Bitcoin to exist. There simply is not enough Bitcoin for everyone! Once the masses catch on, it will be a race to secure a slice of the pie.

As of this writing, after two weeks on the market, the cumulative trade volume of the 11 newly-approved ETFs has surpassed $22 billion.

Gone are the days of Bitcoin investing being an esoteric club reserved for techy millennials. It suffices to say that the SEC’s recent greenlight will usher in a new era for the Bitcoin investor ecosystem. The new guard will be one that opens its doors to participants from all walks of life and bitcoin-experience levels. Yes, even the once dubious onlookers.

Now, why the heck is an oilfield service company talking about bitcoin? Tune in next week for part 2, where we’ll drill into why this matters for the oil & gas industry.