Discover more from Web3 Academy
Bitcoin to $1,000,000 Once This is LIVE
BlackRock’s ETF Is About To Legitimize Crypto
GM DOers! 🚀
Over the years, companies like Grayscale, Fidelity, and VanEck have fought to bring a spot Bitcoin ETF in the US markets. 🇺🇲
However, the SEC has always fought back and rejected each application. 🥊
Last week though, BlackRock (BR), the biggest asset manager in the world, just filed for a spot Bitcoin ETF with the SEC and this could be it…'
If you have no idea what an ETF is, how it works, or what its benefits are, don’t worry, we’ll explain it today.
But before we do that, let’s talk about BR…
This giant manages a whopping $9.5 Trillion in assets. Their business model is essentially taking people’s money and investing it for them.
Their investments are spread out across multiple sectors and industries, and include cash funds, commodity funds, stock funds, bonds, real estate, and more…
Now, they want to get into crypto!
But let me emphasize on what $9.5 Trillion means…
There’s ~6 Trillion physical dollars in circulation
The wealth of the world’s 2100 billionaires equals $9 Trillion
And since BR manages almost $10 Trillion, they’re considered one of the biggest financial forces on the planet. 🌎
And any moves they’re making in crypto will have a huge impact on our beloved industry.
P.S.- Shoutout to our community member Paul Martin for sharing this context in our Discord. 💪
So, now that you’re fired up about BR heading into crypto, let’s talk about ETFs…
👉 Lens Protocol: The Future of Social Media
Decentralized social media finally allows creators to own their content, data and followers. That’s why we choose to build part of our media platform on Lens Protocol.
What’s a Spot Bitcoin ETF? 📊
A Spot Bitcoin ETF is a type of Exchange Traded Fund (ETF) that directly invests in actual Bitcoin through buying this ETF, like buying a stock on the stock exchange. 📈
‘Spot' means that the ETF involves buying and holding the actual Bitcoin itself on the 'spot market', where assets are bought and sold for immediate delivery.
Countries like Brazil and Canada already have an active spot Bitcoin ETF. But we’ve been waiting for years for the US (the world's biggest market) to have one too…
Today, you can only purchase Bitcoin futures on the stock exchange. However, those don’t reflect the actual price of Bitcoin.
And that’s a problem, and why we need an actual ETF, that essentially works like a picnic basket that only contains apples (where apples represent Bitcoin). So, if you buy a share in this ETF, you are effectively buying a share in a basket of actual Bitcoins that the ETF owns and manages.
The price of this Spot Bitcoin ETF will fluctuate almost based on the current 'spot price' of Bitcoin in the market.
Level up your game in web3! 🚀
Receive weekly onchain reports combined with industry insights to understand where this space is going to successfully build and invest in web3.
By being a PRO, you’re not only limited to our reports! We’ll airdrop you an NFT that grants you access to our bi-weekly events along with perks & early access to various web3 protocols.
Ready to capitalize on the opportunity?
Pros ✅ and Cons ❎ of a Spot Bitcoin ETF:
The main benefit of a spot Bitcoin ETF is the easy access it provides.
It eliminates the need to understand crypto wallets or create accounts on cryptocurrency exchanges and allows investors to invest in Bitcoin on the stock market.
If we’re reasonable, we’ll admit that most institutions and big (boomer) investors won’t want to create a wallet or go to an exchange to buy Bitcoin. 🤷
But if this is available with their stockbroker already, they might just be more tempted to get exposure to it, using familiar investment tools, without owning Bitcoin directly.
This also allows investors to gain exposure to this new asset class by simply diversifying their stock portfolios.
Lastly, the reason why this is a big deal is the fact that this Bitcoin ETF would be correlated 1:1 to actual Bitcoin. That means that if someone buys 1 share in BR’s ETF, 1 Bitcoin will be taken off the market.
Say hello to the law of supply and demand, aka price goes up. 🚀
However, a Bitcoin ETF has some drawbacks:
No Ownership: As an ETF investor, you can't self custody or trade the Bitcoin for other cryptocurrencies because you don't own the Bitcoin.
Trading Times: Traditional exchanges operate only specific hours, unlike crypto exchanges which operate 24/7.
Price Discrepancy: The real-time price changes of Bitcoin may not be accurately reflected in the ETF, especially if the ETF includes multiple holdings (this won’t be the case with BR’s ETF).
With all of that said, a Bitcoin ETF on the US stock market would be game-changing. This will allow institutions and TradFi investors to get exposure to Bitcoin, without the need to create a wallet or expose themselves to risks.
This is a safer, easier, and more efficient way for 90% of the US population to get into Bitcoin.
(Most investors don’t care about wallets and interacting with web3 yet. They would just like to buy some Bitcoin safely. This ETF will allow them to do just that.)
Once it’s live (when, not if), this ETF will change everything, and will most likely spark the bull market we’re all waiting for. 🚀
🤝 Thanks to our trusted exchange partner, BYDFi.
We believe that we’re in the early stages of a bull run and there’s no better time to buy crypto. This is when you should be practising monthly dollar cost averaging into strong network tokens like Ethereum and Bitcoin. 💪
And if you’re buying it’s important to do so with a licensed and reputable exchange. That’s why we recommend using BYDFi. 🚀
How BlackRock’s ETF Will Work 🤔
We’ve read the BR (aka iShares Bitcoin Trust) filing so you don’t have to.
What we (and many others in the space) uncovered is that this ETF is actually a trust (or so it’s called). And that’s not ideal.
We already have a Bitcoin trust: Grayscale Bitcoin Trust. GBTC holds Bitcoin, and shares can be purchased over-the-counter for price exposure to the underlying Bitcoin.
The problem, however, is that this trust is trading at a much lower price. The market value of a share of GBTC is $13.40 even though the amount of bitcoin held per share is $23.00.
But is this how BR’s ETF (trust, whatever) will work?
Nope… according to Bloomberg analyst, Eric Balchunas, this is the real deal.
These guys are HUGE and if they apply for something, they’re gonna get it.
Why Are We Bullish? 🐂
BR operates through an army of consultants all over the world. Here’s how it works:
BR has a product (e.g. ETF)
Consultants are rewarded 3% if they sell this product
Consultants spread awareness about BR’s products with the goal to sell
Here’s an example about the market cap of gold, before and after BR, highlighting their global influence:
Pre-BlackRock = $1T
Post-BlackRock = $13T
How did this happen?
BR (iShares) owns 3 of the 5 biggest gold ETFs in the world.
To make sure people invested in these ETFs, BR sent advisors and consultants all over the world to spread awareness on how good investing in gold is.
Fast forward many years later, here’s what happened:
Many retail investors sought to invest in gold
Asset managers started to include gold in their products
Central banks started to buy gold
TL;DR: Gold 🚀
It’s not like gold wasn’t traded before BR’s ETFs. It was. But thanks to BR’s push through their consultants (who told millions of users that you *needed* gold to have a well-balanced financial safety net), the rise of gold’s popularity grew immensely, in a short period of time.
We don’t want to speculate, but the same scenario is bound to happen for Bitcoin.
BR will arm advisors to educate millions of consumers on allocating X% of their portfolio to crypto and change the narrative entirely.
With time, young investors will reach the high seats of governments and central banks, and with the dollar’s denomination, we’ll likely turn to Bitcoin for our reserves.
Or maybe not… Only time will tell. However, this scenario got a hell of a lot more likely thanks to BR’s adoption of Bitcoin.
Shout-out to Adam Cochran’s thread explaining how BR changed the gold market. Read it here.
Wrapping Up: What We Make Of This 🤷
This application comes at the most uncertain and confusing time. 😵💫
The SEC is going aggressively after Coinbase and Binance, creating a lot of FUD. Now, BR applies to get an ETF listed and intends to use Coinbase’s services.
And they’ll most likely get approved.
Keep in mind that the approval won’t come any time soon. The way this works is in phases.
The SEC has 45 days to approve, deny or delay
If they delay, they have another 45 days
If they delay again, they have 90 days
And if they delay again, they have an additional 60 days.
So… the SEC can delay the process up to 240 days, after which they need to make a decision.
With all of that said, we can’t help but think that the SEC lawsuits against this industry’s largest players were all a play to crash the prices so that the real big players (BR) get in on the cheap.
We don’t want to be the tinfoil hat guys but it does truly appear that way.
The only thing we know for certain is that once this ETF is approved, it will legitimize the space a lot.
Warren Buffett will go to his broker only to see he can buy spot Bitcoin. He’ll be pissed. 😂
But if he reads Web3 Academy, he’ll know self-custody is the way. While the ETF is a great tool for big investors, for most people, buying crypto on an exchange + custodying it on a hardware wallet will be the way to go. To read more on this, refer to Friday’s newsletter here.
To wrap up, we think that once this ETF is live, it could very well spark the bull run we’re all waiting for, because the amount of Bitcoin taken off the market will be significant.
Do you agree? Reply to this email with Yes/No!
Thanks for reading. And remember, you're strong, you’re powerful, you’re alpha! ❤️
See you soon. ✌️
Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.