When it comes to alternative investments, there is perhaps no more intriguing prospect than bitcoin.
The eight-year-old cryptocurrency is still a big unknown for many, and it’s a very small asset class in Wall Street’s eyes.
Yet this could all change very soon, as bitcoin may soon be available to investors via an Exchange-Traded Fund.
In fact, the Securities and Exchange Commission (SEC) is slated to decide this week whether to green-light a new bitcoin ETF. This would give investors much-easier access to the price moves in the digital currency.
Ironically, the moves of late in the price of bitcoin have been fueled by the prospect of the SEC approving a bitcoin ETF. And this has caused the value of bitcoin to surge to record highs.
Moreover, one bitcoin now is worth more than one ounce of gold.
According to an article in today’s Wall Street Journal:
An ETF could serve as a bridge from bitcoin’s current status as a counterculture technology to mainstream acceptance.
Now that’s what I call an alternative investment.
I’ve been interested in bitcoin from not only an investment perspective, but also from a societal perspective, for a long time.
And though the cryptocurrency has been around for years, it’s not an easy thing for the average investor to gain exposure to.
An ETF would change all that, making bitcoin as easy to own as the S&P 500.
What makes bitcoin such an alternative investment? Well, not only is it not correlated to stocks or bonds, it’s not really correlated to any other currencies either.
That’s because it’s a digital currency that’s not backed by any government. Instead, bitcoin is “mined” or created by computer programmers. It essentially exists on a global network of computers.
I know it sounds somewhat bizarre. And it is, to some extent. Yet the idea of a bitcoin ETF is far from bizarre … and could very well be a reality thanks to the Winklevoss twins.
The Winklevoss twins, Cameron and Tyler, are the men who thought up the initial idea of the social media network that later became Facebook (FB).
Indeed, the brothers are actually best known for their battle with Mark Zuckerberg over the creation of Facebook, as all three were classmates at Harvard in 2003. That’s when the twins enlisted the computing acumen of Zuckerberg to help with their new social media website, ConnectU.
By 2004 Zuckerberg had parted with the twins and launched Facebook. The Winklevoss brothers then sued Zuckerberg for essentially poaching the idea. The men settled the lawsuit, with the Winklevoss twins reportedly receiving a sum of at least $65 million.
Now, the brothers are the brains and the financing behind the bitcoin ETF, which they are trying to get approved by the SEC.
|The New York Stock Exchange Bitcoin Index is up 34.5% in 2017, and up almost 450% since it launched in May 2015.|
Their Winklevoss Bitcoin Trust, with a proposed ticker symbol of COIN, would be listed on the Bats exchange.
Per the WSJ:
Under the SEC’s application rules, a decision is expected on the trust by Saturday. The commission could approve it, reject it outright, or leave a window open for a rejiggered application. A spokesman for the agency declined to comment.
Which way the SEC goes is unclear. But the Winklevoss bitcoin ETF idea has been on the runway before … and failed to take flight.
Our resident ETF expert, Grant Wasylik, told me that he attended the “Inside ETFs” conference in January 2015. The Winklevoss twins had their own session at that event, which he attended.
They had filed for a bitcoin ETF back then, and they were optimistic about approval “soon.”
As Grant told me today:
I remember one of the twins saying: “If you like gold, you should like bitcoin. It’s more portable … it’s more divisible … it’s harder to seize … and it will have more controls (regulation framework).”
Well, now one bitcoin is worth more than one ounce of gold, and it’s getting that much closer to SEC approval.
And as Grant noted:
If it gets approved in ETF form, it should be a big win for bitcoin. That’s because it will open the digital currency to the masses. Anyone with a brokerage account will be able to invest in it without the challenges of buying and storing it.
Spot on, Grant. And, that’s why I will be keeping a close watch on the fate of the bitcoin ETF for Afternoon Edition readers as the process unfolds.
Looking for some fresh ETFs you can trade right now? Grant heard firsthand at this year’s Inside ETFs event about the newest funds the experts are most impressed with. He even shared the crowd’s pick for Best New ETF of 2016 with our Morning Edition readers, along with its nine strong competitors for that coveted title.
Today is a sad day here at the Uncommon Wisdom Daily offices.
Our colleague and longtime friend, Larry Edelson, passed away late last week. He was just 62 years old.
Larry was one of the key voices at Uncommon Wisdom Daily. I know many Afternoon Edition readers were fans and subscribers of Larry’s work, and his unique market insight and expertise.
His presence in all our lives will be truly missed.
If you would like to offer your thoughts on Larry to his family, friends and colleagues, I encourage you to do so at the Larry Edelson Tribute Page.
The markets spent the day pondering what a rate hike at next week’s Federal Open Market Committee meeting could mean for the markets. Financials (XLF, -0.8%) and materials (XLB, -0.6%) led stocks lower, with the S&P 500 closing down -0.3% in Monday’s trade.
• Ameritrade joins the broker cost-cutting party: TD Ameritrade (AMTD) said it will charge $6.95 for its online stock and ETF trades, starting today. It joins E*Trade, which dropped those commissions to $6.95 last week, and Schwab and Fidelity, which dropped theirs to $4.95.
• Deutsche Bank (DB) fell 3.8% after saying it wants to raise $8.5 billion to boost its core capital ratio.
• Netflix and (earn your) Chill: If you’re afraid that binge-watching TV shows and movies on Netflix (NFLX) will turn you into a couch potato, the company has a solution. You can connect a “personal trainer” to your account that encourages you to work out. It can even pause your videos when you stop exercising. This may have inspired the stock to get up and move 2% today. (Quartz)
Good luck and happy investing,
Uncommon Wisdom Daily