Bitcoin ETF

A lot of people have been asking for my thoughts on the ETF and what I think it will do to the price of crypto.

To get the answer, we need to travel back to 1978 when Congress passed the Revenue Act. This bill included Section 401(k), which provided employees a tax-free way to defer compensation from bonuses or stock options.

In crypto, the mechanics would be:

Stake • Hold until 59½ • Early End Stake Penalty of 10%

The reason this is significant is that regular Americans are handing their money over to administrators who are buying assets. This means that even if your neighbor thinks crypto is a scam, there’s a chance they are indirectly buying. To understand how this ETF will impact crypto, we need to consider two questions:

  1. Where do 401(k) administrators deploy the money?
  2. What happens to the assets that receive this money once it gets there?

Stock Market #

Answer 1: In the 1980s, 401(k)s were invested in public companies on the stock market.
Answer 2: The stock market has surged since 1980, except during the dot-com bubble and the global financial crisis.

Nasdaq
nasdaq-historical-chart-2023-12-05-macrotrends.png

Dow Jones
dow-jones-100-year-historical-chart-2023-12-05-macrotrends.png

Housing #

Answer 1: In the early 2000s, administrators started investing 401(k)s in housing. e.g. VGSLX / 2001
Answer 2: The housing market has generally been rising, except during the global financial crisis since 2000.

Case-Shiller Home Price
fredgraph.png

With this ETF, we’re adding a brand-new asset class where 401(k)s can be invested, and it’s Crypto. The U.S. Government is almost finished cleaning out the space to pave the way for a clear path for institutional investing.

If history rhymes, we should be in for an exciting cycle.

 
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