Bitcoin Hits Record High Above $69,000

Summary

The discussion revolves around the surge of Bitcoin to record highs since November 2021, highlighting the stark contrast in the market environment with significantly higher interest rates. The speaker attributes this surge to increased demand driven by the launch of Bitcoin spot ETFs and the upcoming 'halving' event in April. The discussion then shifts to evaluating different Bitcoin ETF issuers, emphasizing the importance of due diligence by considering factors like the issuer's experience, dedication to the crypto space, and educational resources. The speaker expresses a preference for BitWise's ETF due to the firm's longstanding focus on the crypto market.

Takeaways

• 😀 Bitcoin reached a new record high price since November 2021, despite the Federal Reserve's interest rate hikes.
• 🤑 Bitcoin is considered the ultimate risk asset, and people are increasingly willing to invest in risky assets.
• 📈 The launch of several Bitcoin spot ETFs has driven market demand and contributed to Bitcoin's price surge.
• 💧 Bitcoin has limited liquidity, with only 10-15% of the total Bitcoin supply being actively traded.
• 🌊 Inflows into the newly launched Bitcoin ETFs, some with over $1 billion in assets, have been significant drivers of price.
• 📆 The upcoming Bitcoin halving event in April 2024 is expected to further push up the price.
• 🔍 When evaluating Bitcoin ETFs, investors should consider the issuer's reputation, experience in the crypto space, and dedication to education.
• 🏆 Established firms like Fidelity and BlackRock have seen success with their Bitcoin ETFs due to their scale and brand recognition.
• 💎 Smaller issuers like Bitwise, with a strong focus on the crypto space, are preferred by some investors for their expertise.
• 🧠 Due diligence for Bitcoin ETFs should focus on the issuer's credibility and understanding of the crypto market, rather than just the underlying asset.

Q & A

Why is Bitcoin considered the ultimate risk asset?

Bitcoin is considered the ultimate risk asset because it is a highly volatile and speculative cryptocurrency. Its price tends to fluctuate significantly based on market sentiment and demand, making it a risky investment.

What factors have contributed to Bitcoin's recent surge to a record high in March 2024?

The launch of 11 Bitcoin spot ETFs (exchange-traded funds) in mid-January 2024, which increased market demand and liquidity, the upcoming Bitcoin halving event in April 2024, and the overall risk-on sentiment among investors are cited as tailwinds that have driven Bitcoin's price to new record highs.

How does the launch of Bitcoin spot ETFs impact the market?

The launch of Bitcoin spot ETFs has increased market demand and liquidity for Bitcoin. It is estimated that these ETFs are trading with only about 10-15% of the available Bitcoin liquidity, leading to significant inflows and price appreciation.

What is the significance of the Bitcoin halving event in April 2024?

The Bitcoin halving event, which occurs roughly every four years, is a mechanism that halves the reward for mining new Bitcoin blocks. This is expected to reduce the supply of new Bitcoin entering the market, potentially driving up the price due to increased scarcity.

How do investors evaluate and choose among the various Bitcoin spot ETFs?

According to the script, investors tend to look at the issuer's reputation, experience in the crypto space, and dedication to the industry. Well-established issuers like Fidelity and BlackRock have seen the highest inflows due to their overall trust and brand recognition, while crypto-native issuers like Bitwise are preferred by some investors for their specialized knowledge and focus on the crypto market.

What is the importance of liquidity in the Bitcoin market?

Liquidity is crucial in the Bitcoin market, as it is estimated that only 10-15% of the total Bitcoin supply is actively traded or considered liquid. This limited liquidity can lead to significant price volatility and impact the market's ability to absorb large inflows or outflows of capital.

How does the current interest rate environment impact the demand for risk assets like Bitcoin?

The script mentions that, with the Federal Reserve's interest rates now well above 5% in March 2024 (compared to near-zero levels in November 2021), investors are more inclined to take on risk and invest in risk assets like Bitcoin, as they seek higher potential returns in a higher interest rate environment.

What is the significance of the Bitcoin ETFs having over $1 billion in assets under management?

The fact that some of the Bitcoin ETFs have over $1 billion in assets under management highlights the significant inflows and demand for these products. It also underscores the growing institutional interest and acceptance of Bitcoin as an investable asset class.

How does the limited liquidity in the Bitcoin market impact the influence of the Bitcoin spot ETFs?

With only about 10-15% of the total Bitcoin supply considered liquid, the inflows into the Bitcoin spot ETFs can have a disproportionate impact on the market, as they are essentially trading with a limited portion of the available liquidity. This can amplify the price movements and volatility in the Bitcoin market.

What factors should investors consider when conducting due diligence on Bitcoin spot ETFs?

According to the script, investors should primarily consider the issuer's reputation, experience in the crypto space, and dedication to the industry. Other factors like the fund's expenses, trading volume, and liquidity may also be relevant when evaluating and selecting among the various Bitcoin spot ETF offerings.

Outlines

00:00

🚀 Exploring Bitcoin's Resurgence and the Impact of Bitcoin ETFs

The paragraph discusses Bitcoin's remarkable surge to a new record high since November 2021, marking the asset's resurgence despite the Federal Reserve's interest rate hikes. The launch of several Bitcoin spot ETFs, with the BlackRock offering being particularly successful, is cited as a driving force behind the increased market demand. The paragraph highlights the limited liquidity of Bitcoin, with only 10-15% of the total supply being actively traded, which amplifies the impact of flows into these ETFs. Additionally, the upcoming Bitcoin 'halving' event in April is expected to further boost prices. The overall sentiment is that investors are more willing to take risks, contributing to Bitcoin's rally as the 'ultimate risk asset'.

Keywords

💡Bitcoin

Bitcoin is a decentralized digital cryptocurrency that operates without a central bank or single administrator. It is described as 'the ultimate risk asset' in the video, suggesting that it is a highly volatile and speculative investment. The surge in Bitcoin's price to a record high since November 2021 is highlighted, despite the significant increase in interest rates by the Federal Reserve during that period.

💡Risk asset

A risk asset is a type of investment that is considered to be more volatile and risky, such as stocks, commodities, or cryptocurrencies like Bitcoin. The video suggests that Bitcoin is 'the ultimate risk asset,' implying that it is an extremely speculative and potentially high-reward investment, but also carries significant risk. The willingness of investors to move into risk assets like Bitcoin is seen as a sign that 'risk is on,' meaning investors have a higher appetite for riskier investments.

💡Fed funds rate

The Fed funds rate is the interest rate at which banks lend reserve balances to other banks on an overnight basis. It is a key policy rate set by the Federal Reserve that influences other interest rates in the economy. The video contrasts the current Fed funds rate, which is 'well above 5%,' with the rate in November 2021, when it was effectively zero. This change in monetary policy, with higher interest rates, would typically make risk assets like Bitcoin less attractive, yet Bitcoin's price has surged during this period.

💡Bitcoin spot ETF

A Bitcoin spot ETF (exchange-traded fund) is an investment product that tracks the price of Bitcoin and holds actual Bitcoin as its underlying asset. The launch of several Bitcoin spot ETFs in mid-January is cited as a factor driving demand and contributing to Bitcoin's price surge. These ETFs provide investors with a more accessible way to gain exposure to Bitcoin through traditional investment vehicles.

💡Liquidity

Liquidity refers to the ease with which an asset can be bought or sold without significantly affecting its price. The video notes that only 10-15% of Bitcoin is considered liquid, meaning it is readily available for trading. The limited liquidity of Bitcoin is presented as a reason why the flows into the new Bitcoin spot ETFs, which are trading on that limited supply, can have a significant impact on Bitcoin's price.

💡Bitcoin halving

The Bitcoin halving, or 'having' as referred to in the video, is an event that occurs approximately every four years when the reward for mining new Bitcoin blocks is cut in half. This is a pre-programmed event that reduces the supply of new Bitcoin entering the market, which is expected to put upward pressure on Bitcoin's price. The upcoming halving in April 2024 is cited as another 'tailwind' that could drive Bitcoin's price higher.

💡Due diligence

Due diligence is the process of thoroughly researching and evaluating an investment opportunity to understand its risks and potential rewards. In the context of the video, the speaker is asked about the due diligence process for investors considering the various Bitcoin spot ETFs, which all hold the same underlying asset (Bitcoin). The speaker emphasizes evaluating the issuers (e.g., Fidelity, BlackRock, Bitwise) based on their experience, dedication to the crypto space, and ability to educate investors.

💡Issuer

An issuer is the entity that creates, registers, and manages an investment product like an ETF. In the video, the speaker highlights the importance of evaluating the issuer when considering different Bitcoin spot ETFs, as the underlying asset (Bitcoin) is the same across these products. Factors like the issuer's experience, reputation, and focus on the crypto space are emphasized as key considerations in the due diligence process.

💡Advisor market

The advisor market refers to financial advisors and the investment products and services they provide to their clients. The video mentions Bitwise, one of the Bitcoin spot ETF issuers, as being 'very good with education' and helping in the advisor market. This suggests that Bitwise has effectively educated and supported financial advisors in understanding and potentially recommending their Bitcoin ETF to clients.

💡Underlying asset

The underlying asset is the real asset or commodity that an investment product, such as an ETF, is designed to track or represent. In the case of the Bitcoin spot ETFs discussed in the video, the underlying asset is Bitcoin itself. While the ETFs may differ in their issuers and other characteristics, they all ultimately aim to provide exposure to the price movements of the same underlying asset, which is Bitcoin.

Highlights

Bitcoin surged to its first record high since November 2021, even as the Fed funds rate has increased well above 5%.

Bitcoin is considered the ultimate risk asset, and people want to be in risk assets.

The launch of 11 Bitcoin spot ETFs has driven market demand, as they compete for the limited liquid supply of Bitcoin.

The flows into the top Bitcoin spot ETFs, like BlackRock's with $9 billion in assets, are very strong.

The upcoming Bitcoin halving event in April is expected to push the price up, adding to the current tailwinds.

When evaluating Bitcoin ETFs, the speaker prefers issuers dedicated to the crypto space, like Bitwise, over larger firms like Fidelity and BlackRock.

The due diligence process for Bitcoin ETFs should focus on the issuer's expertise and dedication to the crypto space, rather than just the underlying asset.

Transcripts

Talk about the ultimate risk asset, and that is Bitcoin, Of course, the red

headline crossing the terminal right now that Bitcoin surging to its first record

high since November 2021. It has been quite a journey to get us

there, to say the least. And I mean, talk to me about that

because you think about the difference between November 2021 when Fed funds

were at zero effectively, and where we are now well above 5%.

What do you make of those types of moves in this market?

Well, obviously, risk is on. People want to be in risk assets.

And so Bitcoin is the ultimate risk asset asset.

I think the launch of the 11 Bitcoin spot ETF has a lot to do with driving

market demand. You know, if you look at the actual

available liquidity in Bitcoin, like something like 85 to 90% of bitcoin is

not liquid. So that's that 10% that those spot ETFs

are playing with and that flows into those funds are tremendous.

You know, I believe there's four that are over $1,000,000,000 and the

BlackRock one is at like nine. So, you know, if you think about it, the

flows into these products are very strong.

So I think those two things are part of the story.

And then you have the having that's coming up in April, which will also push

the price up. So a lot of tailwinds for Bitcoin right

now, not the least of which is that people are more likely to take a chance

on risk assets. All right.

Really appreciate that. And of course, you mentioned those

Bitcoin ETFs, those launched in mid-January, like you said, upwards of

ten or so that actually launched as new ETFs.

As an investor, how do you do due diligence on that?

Those products, given that they all hold the same thing, what does that process

look like, if from your shoes? For me, I, I look at who the issuer is.

So obviously the big winners are Fidelity and BlackRock.

They have overall trust. They have a lot of experience just

running ETFs. For me, I prefer bitwise as big B

because this is a firm that has been dedicated to the crypto space for years

now. I first met Matt Hogan in 2017 when they

were just getting up and running and he has really been able to help with the

advisor market. They're very good with education,

they're very dedicated to the space, so I'm encouraged that people see that for

me it's all about the issuer. I want to be with an issuer that knows

what they're doing and that is dedicated to the space.

So I tend to prefer something like B2B versus I bid or Fidelity products, which

have obviously been the two biggest winners because just the large scale of

the the firms behind them. But for me, the due diligence becomes

about the issuer and not necessarily the underlying.