- There are high chances that the SEC will approve a spot Bitcoin ETF.
- The SEC has recently met with Blackrock and Nasdaq for consultations.
- MicroStrategy has emerged as an alternative to these spot ETFs.
The potential approval of a spot Bitcoin ETF has been the main theme in the crypto industry in 2023 as companies like Blackrock, Franklin Templeton, and Fidelity applied with the SEC.
Spot Bitcoin ETF likely to be approved
In the aftermath of these applications, Bitcoin price surged to over $44,000, spurring a major altcoin rally. As a result, the total market cap of all coins surged to over $1.7 trillion.
Most analysts believe that the SEC will ultimately approve a spot Bitcoin ETF in 2024 since the applicants have taken measures to prevent manipulation. Most recently, the SEC has met with Blackrock and Nasdaq, two big players in finance.
A spot Bitcoin ETF approval would be a good thing for the crypto industry because it would encourage more BTC investments by institutions. I believe that the recent Bitcoin surge will make it an essential part of a balanced portfolio.
Besides, BTC has overcome some of the top challenges in the industry, including the collapse of FTX, Terra, Mt. Gox, Celsius, and Voyager Digital. It also did well in a period when the Federal Reserve pushed interest rates to their highest level in 22 years.
Still, some analysts believe that the spot Bitcoin ETF issue has been overhyped by market participants. Besides, institutional investors have had ways of investing in Bitcoin for years. Grayscale Bitcoin Trust (GBTC), with over $20 billion in assets, has been around for several years.
Similarly, the ProShares Bitcoin Strategy ETF (BITO) was launched a few years ago. While BITO tracks Bitcoin futures, it has a close correlation with Bitcoin prices.
MicroStrategy vs spot Bitcoin ETF
Investors also have had access to MicroStrategy (MSTR) stock for a while. While MicroStrategy is a technology company, it is now valued primarily as a Bitcoin holding company.
MicroStrategy bought additional Bitcoins worth $615 million, bringing its total holdings to over $5.9 billion. This is important since the company itself is worth $10.50 billion. As shown below, MicroStrategy stock and Bitcoin have a close correlation even though MSTR has outperformed BTC in 2023.
There are benefits of investing in MSTR instead of a spot Bitcoin ETF. First, unlike an ETF, MicroStrategy does not charge an expense ratio. Most of the proposed ETFs have an expense ratio of almost 1%, which is a huge number.
For example, Ark’s proposed ETF has an expense ratio of 0.80%. As such, a $100k investment attracts a $800 fee annually if Bitcoin remains intact. In 10 years, that figure is about $8,000, which is a huge sum.
The other benefit is that MicroStrategy seems to be highly committed to Bitcoin since it has been continually buying since 2021. This means that the company will unlikely sell any time soon.
There are risks for investing in MSTR vs ETFs. For one, MicroStrategy has substantial debts, which ETFs don’t have. It also has an operating IT business that provides analytics solutions to companies.
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