Big Story 2021: This article is part of our Year in Review series.
This year, the crypto market got a Bitcoin ETF, finally.
Well, sort of. Crypto got an exchange traded fund (ETF) that followed Bitcoin futures, which went live on Oct. 19. So Bitcoin is officially available on the public markets — if you squint.
The first Bitcoin ETF from ProShares is an instrument that trades a Bitcoin derivative. It does not buy and hold actual Bitcoin. That would be a spot ETF, and the U.S. Securities and Exchange Commission (SEC) still appears to be wary about such an instrument.
For hardcore Bitcoiners, it shouldn’t matter. It’s fairly easy to buy Bitcoin and anyone can do it. But some people just want to keep all their investments neatly boxed in one dashboard, and a Bitcoin ETF allows them to do that (which should drive demand for BTC). Such buyers can open their Schwab account and see their Bitcoin right next to their Tesla and Wal-Mart shares. That day hasn’t quite come, but maybe a Bitcoin futures product is close enough for the average investor.
The point is: Bitcoin clearly has a place in the TradFi capital markets. And Bitcoin’s fans felt like this was a very, very big deal. There are now three Bitcoin ETFs.
This was less validating than the moment Coinbase, the most widely-used crypto exchange, went public in April with the ticker COIN. Coinbase’s shares are down 28% since its first market close at $328. Still, COIN’s market cap of $51B would make it the No. 6 crypto token, right behind Solana.
There have been other ways stock lovers could indirectly invest in crypto. Jack Dorsey’s payments company, Block, Inc. (you might still think of it as “Square”), has partially been a bet on Bitcoin. It makes a large chunk of revenue and sliver of its profits off buying and selling BTC within its Cash App, and that portion has grown dramatically. The firm also bought $50M worth of BTC in October 2020 (then more in February), a cache whose value has multiplied.
Square was preceded here by another publicly traded company, Microstrategy. Michael Saylor’s company got into BTC as a hedge against the dollar in August 2020. Microstrategy keeps buying BTC. According to a recent SEC filing, it now holds 121,044 BTC ($5.7B).
Still, Bitcoiners look forward to the day that normal people with a brokerage account can get there directly. Now that BTC futures are available as various ETFs, a true Bitcoin fund may not be that far off. It only took eight years from the first application for one to be approved, so, what’s the bet for a spot ETF? 2025?
In the meantime, DeFi has tons of indices ready and waiting.