It’s the Bitcoin Spot Trading ETF. And there will likely be more than 1 approved soon. But there’s something important NO ONE is telling you. And because of this one reason, I am buying all the Bitcoin I can before Blackrock does. This will be one of our last chances to get REAL Bitcoin. What do I mean? Stick around and find out.
Bitcoin Banks & ETFs
Way back in 2010, cypherpunk legend and recipient of the first Bitcoin transaction Hal Finney had this to say about Bitcoin banks. Finney said most transactions will occur between banks with Bitcoin as the reserve currency. Then the banks will be settling the net transfers.
He says that banks will issue their own “digital cash” Well, so what, you ask? Many took this to mean that Layer 2s like Stacks for Bitcoin or Arbitrum and Starkware for ETH will settle transactions before broadcasting to Layer 1.
And this mostly happens right now. Stacks does it running a sidechain to Bitcoin. But what about ETFs? ETFs are coming soon. And they are going to be HUGE Bitcoin holders. They could easily become part of, if not the entire, Bitcoin bank layer of settling transactions between buyers and sellers.
As a Spot ETF, they will have to hold real Bitcoin. The same BTC that you and I have right now, and make it available for their investors.
The Bitcoin Halving
In April, we will see a halving. That’s a cut of the block reward in half. It will go from 6.25 down to 3.125 BTC with every block. Miners will end up having first access to these coins as they get the coin when they win the block.
Right now, most miners are . At the highest rate in the last 6 months. And if they do, then their coins are available in the broader market. But, the ETF. Blackrock is already buying to seed its ETF. Van Eck, Ark Invest, and Fidelity will not be far behind.
??BREAKING: BlackRock bought #Bitcoin
BlackRock told the SEC last week it will buy bitcoin to fund its Bitcoin ETF in October in preparation for approval.
Blackrock has begun seeding its ETF.
Seeding an ETF is to obtain capital, to buy creation units for the ETF, in this case… pic.twitter.com/SyAEChwTAz
— That Martini Guy ? (@MartiniGuyYT) October 30, 2023
Bitcoin traded $15.4 billion in the last 24 hours across all exchanges. Now this does not include OTC activity. There’s no doubt Blackrock and the others will use OTC to buy some coins. This $15.4 billion is spread out over lots of different exchanges. The 2 biggest trading pairs, each at over $1 billion, are on Binance. After that, no one has more than 3.5% of the total volume, or $400 million.
And where will most of this liquidity go? To the ETF funds. OTC buyers will buy to then sell to BlackRock OR these coins will never make it to BINANCE as BlackRock or Van Eck buys them directly. They are going to take most of the liquidity out of the market. And VERY SOON.
In simpler language, The Street.com says $30 trillion in new capital will come into the market to fund these spot ETFs. Remember, as a spot ETF, they need to have the coins available in their fund.
This means at the current daily trading volume for Bitcoin at $15 billion, the $30 trillion will be buying 2000 days worth of the total trading volume. That’s almost 6 full years worth. Are you starting to see the picture now?
Then, back to the halving. The block reward will be cut in half soon. So that means these 2000 days will be more than 2000 days worth of total liquidity. How much will still be available on exchanges for you to buy? Not much.
Real vs Synthetic Bitcoin
So a halving is coming in April. That’s fewer new Bitcoins coming into the market every 10 minutes. Bitcoin ETF approvals are coming. They will capture nearly all the liquidity on exchanges and OTCs for the next 5-6 years. It’s just math.
So yes, fewer Bitcoins will be available for the public like you and me. But the even bigger threat is synthetic Bitcoin. Let’s look at what happened to Gold. People want access to gold but gold is expensive to store and it’s heavy, inconvenient, and dangerous to carry around.
So enter paper gold or gold certificates. They are supposed to be backed 1:1 by real gold in storage somewhere. The problem gold investors face is EVERYONE believes there are more gold certificates out there than they can redeem for gold bars or coins. And this is a problem. You see the certificate is a derivative of gold and not the real thing.
has severely underperformed for years. The paper gold price in US Dollars is far from a free market. Gold prices would have to be at or above $2500/oz to keep pace with CPI inflation since 2020. https://t.co/dvaedUhLYw
— Jason Burack (@JasonEBurack) October 27, 2023
The same thing will happen with Bitcoin. As sure as we are sitting here on YouTube, when Blackrock gets its $2 trillion in Bitcoin (or more) for its fund, they will NOT want to get rid of it. They understand its value just as you and I do.
Blackrock will offer certificates too. Not paper or digital. But they will launch a token based on their Bitcoin holdings and people will trade back and forth between that. Just like what FTX tried with soBTC, but done legally.
Wrapped Coins, Synthetic Coins, and Derivative Coins are coming to Bitcoin in a BIG way. And the issuers will be the ETF funds themselves. Whether they are honest about backing it 1:1 with Bitcoin in their ETF doesn’t even matter. They will do it and that’s how investors will be able to withdraw funds.
It’s Hal Finney’s Bitcoin banks theory coming to life, but maybe not exactly in the way he intended. Blackrock will continue to hold its real BTC. They will net out the difference of their synthetic BTC and settle it in real BTC if needed.
If one Bitcoin ETF gets approved, the others will follow. It's impossible only to approve one. The is against the wall.
The hype will be good for cryptocurrencies. But ultimately, Bitcoin will become “unlimited supply” due to rigged paper contracts, like Gold.
— Marius BitcoinTAF.com (@LandM_Marius) October 28, 2023
So if you want to assure yourself and future generations that you have real Bitcoin and not some silly synthetic Blackrock-issued version, then you need to buy now while there is enough liquidity in secondary markets before ETF approval.
Eventually, we will be left with the real Bitcoin market, with only a few private holders, and the synthetic Bitcoin market, which will be huge and include most of the public. I know which one I would rather HODL. What about you?
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
