How much money is sitting in the global ETF market, exactly, and why should we care?
These days, most of the Bitcoin (and some of the trad-fi) world are drinking the four-sugar, four-cream extra caffeinated hype sauce coming from the excitement around the pending ETF approval(s) in the United States. If you’re reading this, you probably have what some of your friends would call an irresponsible amount of exposure to Bitcoin. You hold spot in cold storage, you hold MSTR in your tax advantaged account, you might hold one of the few spot ETFs or GBTC, you probably either hold or have held any or all of these things over the last two-plus years. You’ve been through both hell and high water, through good times and bad, through sickness and health. You’ve demonstrated commitment that even the most devout Christian couple would be envious of. And you did it without anyone in the cantillion class patting you on the back or telling you Bitcoin was a legit asset.
Well, things have changed.
The ETFs are either one or several months away, depending on who on the (former) bird app you believe, but in any case, for the first time, there is consensus between Bitcoin and traditional finance on one thing – the ETFs are coming, in America, for the first time.
What’s this mean for price, exposure and – maybe for the first time you have to ask this question – are you actually underexposed?
As of June 2023, there was 10 or so trillion USD parked in ETFs around the world, with 7.1 trillion of those dollars parked in equity ETFs (as opposed to energy, for example, or other silos). Compare this to the December 2023 Bitcoin ETF numbers:
- ProShares Bitcoin Strategy ETF (BITO): $904 million
- ProShares Short Bitcoin ETF (BITI): $69 million
- VanEck Bitcoin Strategy ETF (XBTF): $45 million
- Valkyrie Bitcoin Strategy ETF (BTF): $25 million
- Simplify Bitcoin Strategy PLUS Inc ETF (MAXI): $22 million
- Global X Blockchain & Bitcoin Strategy ETF (BITS): $11 million
- Purpose Bitcoin ETF (Canadian) (BTCC): $1.1 billion
Clearly there is demand for a spot ETF product. A few things to consider here for the HODL crowd:
- How many dollars/people are on the sideline waiting for their broker to be able to suggest an ETF to them as part of their quarterly/yearly/whatever-ly meeting?
- How many dollars are in brokerage accounts and won’t come out for spot, but want exposure ASAP, due to fees, paperwork, time, discussions with advisors etc?
- How many people are waiting for something closer to an ATH to look into buying the BTC ETF product of their choice, American or otherwise?
- How much of the faltering $23 trillion in the US bond market is looking for a better performing asset away from USD or counterparty risk?
- How many people know/will know that one of the main catalysts for hard-money panic in 1971 was sustained high inflation? How many of those will allocate some % of what would have been an all-gold portfolio to Bitcoin instead?
For me, the answer is I’m not sure, but I’m not willing to have money on the sidelines while I find out, and I don’t think I’m alone.
Consider that, as this thing inevitably screams to new all-time highs, many of the people who have lost faith in the traditional system, it’s currency, its professional classes, and it’s rulers will look for an asset to outperform their former captors and – for the first time – Bitcoin will have the history of outperformance and the legal/legitimacy fog removed from the picture.
Underexposure may actually be the reality for many of us, even after nearly a decade of overexposure in the eyes of many.
Stay long or get long, friends (not financial advice).