What if Bitcoin ETF's Never Make Money?
Updated
Above is Blackrock's new Bitcoin ETF.
This is mostly a joke and a "wait and see" post. I'm curious whether the liquidity generated by these Bitcoin ETF's creates a permanent resistance at their opening day high, which is around $30 for IBIT. I'm speculating that Bitcoin may never again breach 50k. Again, I'm partially kidding with this post but wouldn't be surprised if it came true.
Essentially, when various cryptocurrencies are listed on prominent exchanges like Coinbase or Binance, they initially pump on their first day of trading, only to dump endlessly in the weeks following. Hardly any hyped cryptocurrencies survive their listing date and move on to achieve new highs. That's because the listing day is the day where the most of that coin is traded, the sellers being insiders and whales who held until that very date with the intent to never buy back. With access to so much more liquidity, it becomes easier to sell without immediately tanking the price. Price only tanks once demand totally evaporates. Essentially "exit liquidity."
So, the demand for Bitcoin must remain elevated in order for these ETF's to be successful. We'll have to see what happens. I speculate that the demand will not be high enough given the liquidity and the scarcity of Bitcoin to keep price up. In theory, Bitcoin's scarcity is an advantage here, but my implication is that it's a double-edged sword. Scarcity can also have a psychological impact, which I think Bitcoin proponents often ignore. Especially if the thing itself isn't very useful, scarcity can just cause people to have less interest in it. "It just doesn't matter as much anymore. I'll just buy other things. People already own most of it, why bother?"
Bitcoin does not have much value at all to society. This is easily provable because if it ceased to exist, not much would change. Until this is no longer the case, I will continue to believe Bitcoin doesn't have much growth ahead of it. It'll remain niche and important for some utilities, but it isn't the future of money.
On the other hand, if the Internet ceased to exist we'd have way more problems. Society would likely collapse until we rework our systems backwards to how they were before. It would probably be worse than the great depression.
Now about a popular theory as to why price dropped recently.
Grayscale this, grayscale that. Grayscale's high fees and the resulting switch from grayscale to newer ETF's is only part of the equation, I think. Otherwise, we'd see those funds quickly going into the new ETF's. Many Grayscale buyers bought their shares at a huge negative premium, and so they are making extra profit, on top of Bitcoin's gains from the last year. They could be selling, never looking back. I'm also guessing some long term Bitcoin holders are folding here, with not much else to speculate about. Again, I think this is a "jig is up" moment, much like the super bowl ads in 2022.
Because Bitcoin is now trading outside of the crypto world in such a meaningful way, there is now a vacuum between the two markets. The stablecoin cartel will then have a much harder time influencing price, which is how Bitcoin's scarcity works against it. Now, the big boys on wall street can also go short on these new ETF's.
It will be simple to prove this speculation wrong. Bitcoin will just have to pump over 50k at some point in the future. It'll be funny if this turns out to be correct, but I don't think the chance of it is high. My opinion on Bitcoin is pretty low, so I wouldn't be surprised if it turned out to be true either.
I still think Michael Saylor will become a forced seller at some point in the future. He is quite overleveraged and controls a very large portion of all the Bitcoin.
Thanks for reading, even though there isn't much substance in this post.
As always, this is meant for speculation and entertainment only.
-Victor Cobra
This is mostly a joke and a "wait and see" post. I'm curious whether the liquidity generated by these Bitcoin ETF's creates a permanent resistance at their opening day high, which is around $30 for IBIT. I'm speculating that Bitcoin may never again breach 50k. Again, I'm partially kidding with this post but wouldn't be surprised if it came true.
Essentially, when various cryptocurrencies are listed on prominent exchanges like Coinbase or Binance, they initially pump on their first day of trading, only to dump endlessly in the weeks following. Hardly any hyped cryptocurrencies survive their listing date and move on to achieve new highs. That's because the listing day is the day where the most of that coin is traded, the sellers being insiders and whales who held until that very date with the intent to never buy back. With access to so much more liquidity, it becomes easier to sell without immediately tanking the price. Price only tanks once demand totally evaporates. Essentially "exit liquidity."
So, the demand for Bitcoin must remain elevated in order for these ETF's to be successful. We'll have to see what happens. I speculate that the demand will not be high enough given the liquidity and the scarcity of Bitcoin to keep price up. In theory, Bitcoin's scarcity is an advantage here, but my implication is that it's a double-edged sword. Scarcity can also have a psychological impact, which I think Bitcoin proponents often ignore. Especially if the thing itself isn't very useful, scarcity can just cause people to have less interest in it. "It just doesn't matter as much anymore. I'll just buy other things. People already own most of it, why bother?"
Bitcoin does not have much value at all to society. This is easily provable because if it ceased to exist, not much would change. Until this is no longer the case, I will continue to believe Bitcoin doesn't have much growth ahead of it. It'll remain niche and important for some utilities, but it isn't the future of money.
On the other hand, if the Internet ceased to exist we'd have way more problems. Society would likely collapse until we rework our systems backwards to how they were before. It would probably be worse than the great depression.
Now about a popular theory as to why price dropped recently.
Grayscale this, grayscale that. Grayscale's high fees and the resulting switch from grayscale to newer ETF's is only part of the equation, I think. Otherwise, we'd see those funds quickly going into the new ETF's. Many Grayscale buyers bought their shares at a huge negative premium, and so they are making extra profit, on top of Bitcoin's gains from the last year. They could be selling, never looking back. I'm also guessing some long term Bitcoin holders are folding here, with not much else to speculate about. Again, I think this is a "jig is up" moment, much like the super bowl ads in 2022.
Because Bitcoin is now trading outside of the crypto world in such a meaningful way, there is now a vacuum between the two markets. The stablecoin cartel will then have a much harder time influencing price, which is how Bitcoin's scarcity works against it. Now, the big boys on wall street can also go short on these new ETF's.
It will be simple to prove this speculation wrong. Bitcoin will just have to pump over 50k at some point in the future. It'll be funny if this turns out to be correct, but I don't think the chance of it is high. My opinion on Bitcoin is pretty low, so I wouldn't be surprised if it turned out to be true either.
I still think Michael Saylor will become a forced seller at some point in the future. He is quite overleveraged and controls a very large portion of all the Bitcoin.
Thanks for reading, even though there isn't much substance in this post.
As always, this is meant for speculation and entertainment only.
-Victor Cobra
Comment
I realize also that the title of this is silly, because regardless of whether it goes up or down someone will make money, especially Blackrock. I more so meant buyers expecting price to increase significantly and consistently over time.Comment
Interesting that Bitcoin price has made a new local high, but IBIT has still failed to reach its opening day high. 
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