Bitcoin ETF... Is it BULLISH or BEARISH?

Transcript

if you are a bitcoin holder you've been waiting patiently for this time to come it is all-time high week for bitcoin we crossed the previous all-time high of 63 500 setting a new all-time high of sixty seven thousand one hundred dollars taking a little bit of a tumble back down to sixty three dollars or sixty three thousand two hundred dollars but still broke the all-time highs that's big man that's big so the last previous all-time high if i recall correctly was sometime in april april 13th 191 days ago so bitcoin holders like through this whole bull run they've been they've had to be very patient because they've

watched all of these other assets pump since april in particular like we had this alt layer two layer alt layer one summer we had sort of a d5 2.0 kind of resurgence as well and bitcoin holders if you are a bitcoin holder you've been waiting patiently for this time to come the big news was going to be the etf right and here it is it happened this week and that's why we're seeing the bitcoin pump does that explain all of this david i think that a broader question that i want to ask is like we went through a all-time high at where where we are now 191 days ago 27 weeks ago then we went through like this period where bitcoin just got slammered with fud after flood after clamored huh

china energy flood esg fudge like regulation fudd and it took a beating it went all the way like how how low did it get like 29 000 26 uh 7 000 or something before returning back to back to all-time highs and so like pretty crazy right uh and like what is it 27 weeks half of a year like there's always the conversation about bitcoin goes in cycles like was that a mini cycle was that a full cycle does does it even matter as a cycle to talk about did we just go through like a full like seasonality cycle i don't really know um important story is um we are back at all-time highs yeah the other i guess uh what that means as well is bitcoin is rising up the ranks in

terms of global currency so it just passed the swiss franc in terms of value total value there's there's you know bitcoin total outstanding supply is more valuable than total outstanding swiss franc so it's the 13th largest world currency by market cap at this point in time unbelievable right where are we 12 years 13 years into this experiment at the same time that makes it feel so low i feel like it doesn't that's it like bitcoins only beyond like the only number 13. friends we are early we're still early right it's gonna be moving up these charts now let's get to the main event news items david let's start here man bitcoin etf this is history it's been eight years in the making all right the

winklevoss twins all the way back in 2013 they started this they first applied for a bitcoin etf in 2013. hoping that the market was ready to get some retail exposure to etfs didn't happen year after year after year didn't happen eight years later it finally happened okay so walk us through this david what's what's going on with this new bitcoin etf what is it yeah the pro shares b-i-t-o futures-based bitcoin etf using the cme uh um cme for the price reference rate uh and so uh congratulations we finally got the bitcoin etf yay how happy are you about there's a big

asterisk uh there's a big difference between a futures based etf and a spot based etf and while we are happy that we have a bitcoin etf the game is not up it's just a start because okay what's the difference okay so the future a few bitcoin futures offered by the cme they have monthly contracts that end at the end of every single month the last day of the month or the last trading day of the month i think that's how it works uh and so there's one for october that'll be up in like 10-ish days there's one for uh what's the month that comes after november december january for the next six months every there's it's a rolling six months and then there's also the next december and then also the december after that so you can pick like which

which date do you want to make your bet about the the future price of bitcoin uh sounds good right and there was recently a report that was submitted to the sec saying that the few on the onshore cme futures markets are actually driving the price discovery of bitcoin over the spot markets which i'm a little bit confused about but i'll take it on faith because people who write that report snow way more than me the the problem with this as a etf model is that the way that the etf works is that it tracks the price of the most the next coming futures exchange so like if we if it was like november uh second right uh the etf would be tracking the futures price of the next month and they it would be rolling in to every single as

the contracts the futures contracts settle because it resettles once a month every every month it rolls into the next uh the next futures month and so there's these things this thing's called contango where there's a actually a discrepancy between uh the bitcoin futures price of one of month one to month two so like say for example the bitcoin futures of month one is is uh clocking in at sixty thousand dollars and then the next month people futures traders have predicted that it's going to be 62 000 the etf will sell all of the 60 000 valuations of bitcoin into 62 000 valuations of bitcoin and they will actually lose shares along the way of course that this can actually happen in

reverse so in theory it cancels out over time but really what this does is this allows a bunch of middlemen and traders and who want to take advantage of this arbitrage opportunity to just kind of milk out just the leakage of value out of this etf right so like do you know how to trade around fit terms like contango like is that something that you know how to do because other people do and other people are taking advantage of this but you basically all you have to do is you just like the value of an etf is that it's in a brokerage right so it's in somebody's schwab account their fidelity account they don't have to open up coinbase you just buy it with all their other stocks they buy the etf but what you're saying is because it's a futures etf and not a

spot etf it's less capital efficient for them to do so and it's more expensive for them to do so versus a spot etf right the best thing you can do of course is get over the hump go open an account at gemiini or coinbase and just buy spot market and let like them custody it and then graduate into you know going bank list that's the best thing you can do but if you're locked into a retirement account an etf is the second best the problem is this etf is a futures-based etf it's not a spot-based etf and so it's more expensive for you you're actually losing money versus buying bitcoin in in a spot market on something like coinbase is that right

yeah that's exactly right so if you are interested in just buying and holding btc bitcoin on your traditional brokerage this is actually just not you're going to lose money over time than if you had just bought actual bitcoin uh and so that actually just puts people that actually compliantly can't go actually buy bitcoin at a disadvantage because they have to pay all these fees all these uh these traders their arbitrage opportunities uh where they could have just done a spot driven market and the difference the very important difference about a spot driven market is that when people buy a spot driven market etf that etf goes out and buys bitcoin and puts it on the balance sheet right there's actually bitcoin there and so actual etf demand is actual bitcoin demand and so this a

whole futures base etf if if it has a ton of demand it might not actually translate to actual bitcoin demand or at least it will it will but it won't be immediate in a roundabout way in a very roundabout way and really that roundaboutness puts money into the hands of intermediaries and scalpers and like when it comes to the sec who approve this by the way what is their job their job is to protect investors and so they are just shoveling investors into the place that they just get scalped like what the hell dude it's it's it's not the best etf uh absolutely right i mean the thing that they could have done is just approved a spot bitcoin etf i guess the argument is

that this is a step in that direction and this is a more gated regulator-friendly type approval because they know all of the intermediaries all of the incumbents that are you know are doing this uh so i guess it's a big deal that they did approve it right that is a step in and of itself that the government came and said okay fine you can have your bitcoin etf after eight years of retail asking for it the question is how long will it take them to get to a spot etf which is much more are we gonna have to wait another eight years right god i hope not are they gonna use this as like a defense like we already gave you your etf why do you need another one also i really want an eth etf i mean if we have bitcoin etf then where's our eth etf

that should be coming down the pike too so it's kind of like it's good news but it's also a little bit like come on we could do better can't we i hope this is just the first step uh one thing that scc tweeted out shortly before approving this this is the week before i guess is a reminder before investing in a fund that holds bitcoin futures contracts make sure you carefully wear the way the potential risks and benefits this is what this is the tweet that tipped everyone off like oh my gosh there's an etf coming yay i i just think that there are some hidden risks and hidden costs that this type of structure doesn't actually tell you about and it would be nice if those were

acknowledged as well in this kind of a warning um i think in summary like we can zoom out and say oh the etf that got approved is the one that is exactly what the incumbents and and the the current institutions would want the most and benefits them the most uh shocker weird but like this is this makes sense because regulators know the incumbents they know how to regulate them they know how to you know put the stranglehold on them if they need to and all of these new entrants are outside of their control right so they feel much less comfortable so who are they going to let do it they're going to let kind of their friends the existing organizations whom they already already regulate do this um i mean but we want spot we want spot etf

spot we want spot we want uh great great scale wants great right right so grayscale has made a big etf push filing to turn their gptc fund into a btc and the ticker name filed for bit ticker name btc etf uh and so they are taking this opportunity to take they took opportunity by the horns and they are now making a very political move saying like hey give us the spot market give us a smart market so more power to grayscale well it it's interesting because it puts regulators in this position where they're kind of king making right i was like we're going to approve these etfs but not these etfs right and so what's what's the set of criteria by which they'll prove someone's etf and i think that's where grayscale is like hey

people are buying our trust anyway we have massive amounts of bitcoin inside of this thing why not just make this an etf let's make it official hey we hope you enjoyed the video if you did head over to bankless hq right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence we recommend joining our daily newsletter podcast and community as a bankless premium subscriber to get the most out of your bankless experience you'll get access to our market analysis our alpha leaks and exclusive content and even the bankless token for airdrops raffles and unlocks if you're interested in crypto the bankless community is where you want to be click the link in the description to

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