Is a US Bitcoin ETF relevant anymore?


Things have evolved rapidly in the Bitcoin ecosystem. Many institutional investors have acquired Bitcoin since 2017. The list includes some marquee names such as Tesla, Social Capital, Square, MicroStrategy, and UK-based Ruffer Asset Management (GBP 22 bn under management) to name a few. The list of finance billionaires who now own Bitcoin has also grown to a reasonable size since 2017. Bitcoin has made a lot of people change their opinion about it and now everyone sees value in it.

Given that more and more UHNWIs and corporations are warming up to bitcoin and purchasing it, the problems associated with buying bitcoin and bitcoin's custody don't seem very unsurmountable. In fact, MicroStrategy has prepared a whole list of documents to educate companies about Bitcoin and how to buy it and store it securely. There are many Bitcoin exchanges that operate Bitcoin OTC trading desks that specially cater to the institutional market and many companies, including the likes of Fidelity offer custody solutions to companies.

Today, I read this news on Coindesk - Invesco Plans Two Crypto-Focused ETFs. Fidelity, VanEck, Invesco, and Gemini are some of the names that have been trying hard to get a Bitcoin ETF approved. However, the SEC hasn't been kind enough to approve any of the applications. Therefore Invesco is now trying to avoid the SEC approval and is planning to launch an ETF that invests in crypto-linked equities and other Bitcoin investment vehicles.

If we look at all of the above, then there are multiple ways for all kinds of institutional investors to invest in Bitcoin. If mandates prevent companies from acquiring Bitcoin directly, then there are these options - Coinbase or MicroStrategy shares, Grayscale's investment trusts, and bonds (convertible debt issued by MicroStrategy to acquire Bitcoin, that is also secured by Bitcoin). There are numerous hedge funds that institutions can invest their money with. To add to it all Invesco will provide a new alternative soon and MicroStrategy will be issuing more debt.

With so many options in place, does a Bitcoin ETF add any value anymore? I guess not, which is why there is not much talk about it these days and the recent concerns raised about the ETF did not cause much furore. There is also a case of a Pension Fund buying bitcoin directly - MassMututal. I guess the only reason why an ETF matters now is because there is an ETF for almost every other asset class and even Bitcoin deserves one!

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