The analogy of Bitcoin

Bitcoin, and by extension the entire cryptocurrency market, is being ruined.

Prices are rising, which is good news for those of us who have been patiently following a steady investment approach. Bitcoin is back, baby!

The question we need to ask is: why?

remember: really no one knows. But people create answers, those answers are repeated and retweeted, and before long, expectations become reality.

The answer this time around is that investors are excited about the possibility of: Bitcoin Spot ETF.

The question we need to ask is: why?

Why are spot Bitcoin ​​ETFs important? And why is this driving the price up even when there is no Bitcoin spot ETF at all? also, What is a Bitcoin Spot ETF??

I will use stories to answer these questions. The analogy of Bitcoin.

most expensive vegetable in the world

Imagine a rare breed of hybrid corn that is incredibly delicious. Corn lovers have declared this to be the tastiest variety in the world. One bite, they say, will keep you from eating grocery store corn forever. They sell for $200 each at Paris Bistro. Try our artisanal salt.

It is called ‘Bitcon’.

Why all the hype? Bitcorns are genetically modified to produce 21 million ears. It is very difficult to obtain and is only grown on small, independent farms in remote areas. Not like that illegalThat’s correct, but for FDA bureaucratic reasons it can’t be sold in American supermarkets.

Corn has acquired a kind of cult status. Hipster corn enthusiasts post lengthy blogs and catchy podcasts about their experiences traveling to remote villages in China to pick their own bitcoin ears. Maybe just a few kernels of corn. Because that’s all they can afford.

Because bitcoins stay fresh for years, some stock up on as many as they can, hoping that the price of an ear of bitcoins will eventually reach $100,000, $1,000,000, or some future price high enough to make people believe it.

You get the idea. That’s expensive corn.

But something radical happens. FDA approves Bitcon. This means you can sell bitcoins at your local Whole Foods.

Wait. In the end, it turned out that they did not approve of Bitcon. It’s a rumor. But the FDA I think I will Whole Foods approves selling Bitcoin. Top agricultural analysts say there is an 85% or 93% chance that the FDA will approve beetcons to be sold at Whole Foods.

Bitcoin market goes bananas. Prices are soaring, and even the price of regular corn is rising strangely. (The corn suddenly becomes hot and feels like butter.)

Remember: The FDA has not actually approved Bitcoin.. But people looking forward to The FDA approves Bitcoin, and the more people look forward to it, the higher the price goes.

The questions we need to ask are: why?

a complete game changer

If the FDA approves bitcorn for sale at Whole Foods, it would be a game-changer for the corn community and the world. Here’s why:

accessibility: You no longer need to go to Mt. Tongo to get Bitcoin Isaac. You can now purchase it at your local Amazon-owned Whole Foods Market.

trust and familiarity: Whole Foods is the store you know and trust. You can buy bitcorn without worrying about getting counterfeit ears of regular farm corn.

Safety and convenience: Traveling to the Himalayas to obtain Bitcoin is dangerous. They might get lost or have their corn stolen. Whole Foods takes care of everything.

Warranty: At a bitcon farm, you may not be sure you are getting the real thing. Whole Foods has assumptions about quality and legitimacy.

Integration into everyday life: Most importantly, Whole Foods’ approval will bring Bitcoin to the masses. Anyone could enjoy it.

This is why millions of dollars are being spent lobbying FDA Commissioner Gary Grocer to hasten the approval of Bitcoin.

Are you hungry yet?

Bitcoin vs Bitcoin

In the real world, a Bitcoin Spot ETF simply means that Bitcoin is converted into a financial instrument that anyone can purchase with an E*TRADE account, like stocks of other companies or exchange-traded funds. Bitcoin will become popular.

Similar to the Bitcoin story, this will make Bitcoin more accessible, trustworthy, and convenient. Buying Bitcoin today is still difficult. You have to create a wallet or open an online account, go through all KYC checks, and keep track of all your keys. Forget it.

But is there any Bitcoin you can add to your IRA? now We are talking.

(The “spot” in “Bitcoin Spot ETF” means that this financial instrument is backed directly by the Bitcoin held in your account. Therefore, the price of the Spot ETF reflects the current price of “spot” Bitcoin. – Opposite of Bitcoin gift This is an ETF based on future prices.)

It is the SEC, not the FDA, that must approve this Bitcoin spot ETF. So far they have resisted because of concerns about price manipulation. This is a reasonable concern because Bitcoin, unlike ordinary corporate stocks, is global, decentralized, and unregulated.

(On the other hand, bad behavior also occurs in SEC-regulated stocks, as we are reminded every time we hear another case of insider trading.)

Make no mistake. We want this to happen. A Bitcoin spot ETF would bring our dreams of a blockchain believer portfolio much closer to reality. All you have to do is set up monthly purchases through an online broker. will be Be a game changer for investors.

so is It’s a big deal. but That hasn’t happened yet.. If you are buying Bitcoin or any other cryptocurrency asset right now, you are “buying the buzz.” And rumors may or may not be true.

This is like the price of Bitcoin doubling overnight due to rumors from the FDA. I think I will Authorize to sell at Whole Foods. It’s twice the price It’s still the same corn.

Implications for Investors

There is no change in our approach.

We buy Bitcoin and a handful of high-quality digital assets as part of a balanced diet. (Rule of thumb: 65% stocks, 25% bonds, 10% Bitcoin and cryptocurrencies)

We purchase the same amount each month as much as we can afford, regardless of price. This gives us a long-term average price and protects us from market frenzy (like now).

It’s common sense, but it’s an uncommon practice.

However, using a Bitcoin spot ETF makes our approach more generalizable to a much larger number of investors.

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