Bitcoin has exhibited a remarkable performance this year. The world’s largest cryptocurrency started 2023 just above $16,000 and climbed to a 12-month high of $45,000 in early December. In fact, Bitcoin’s performance in 2023 has outpaced other assets like global stocks and gold.
After an astounding 2023, bitcoin is expected to continue its bullish run in 2024. Here, we have highlighted several reasons for the optimism:
Bitcoin Halving: Scheduled for April 2024, Bitcoin halving is a major event that reduces the reward for mining new blocks by half. This reduction in new supply has historically led to significant price increases due to the increased scarcity of Bitcoin. Past halving events have been followed by substantial bull markets, making this an eagerly anticipated event by investors.
Approval of a Spot Bitcoin ETF: There is growing optimism that the U.S. Securities and Exchange Commission will approve a spot Bitcoin ETF in early 2024. An ETF would make Bitcoin more accessible to mainstream investors and could drive significant capital into Bitcoin, boosting its price.
Increased Institutional Adoption: Major institutions like MicroStrategy and BlackRock have invested in Bitcoin, enhancing its credibility among institutional investors. This not only attracts more capital but also adds legitimacy to Bitcoin as an investment asset.
Fed Rate Cut Bets: Investors’ expectation that the Fed will soon pause its interest rate hikes has made cryptocurrencies stand out this year. The Fed has indicated a possible end to its rate-hiking cycle, with expectations of lower borrowing costs in 2024. In the latest meeting, the central bank penciled in three rate cuts for 2024 that will likely serve as a “positive boost” for cryptocurrencies and crypto stocks (read: Rate Cuts in the Cards: Bet on Leveraged Rate-Sensitive ETFs).
Global Adoption by Countries: The trend of countries adopting Bitcoin, as seen with El Salvador and the Central African Republic, is expected to continue. As more countries adopt Bitcoin as legal tender, it could lead to a broader market and increased demand.
Bitcoin’s Position as a Safe Option: Bitcoin is viewed as a more secure and established option compared to other cryptocurrencies. Its long history and adoption by major companies and banks contribute to its reputation as a safe investment choice.
ETFs to Consider
In light of the above reasons, investors seeking to tap the opportune moment could consider Bitcoin ETFs. While there are several ETFs, we have highlighted the five most popular ones:
ProShares Bitcoin Strategy ETF (BITO)
ProShares Bitcoin Strategy ETF invests primarily in Bitcoin futures contracts and does not invest directly in Bitcoin. It is the world’s largest and most actively traded cryptocurrency ETF, with AUM of $1.6 billion and an average trading volume of 14 million shares. ProShares Bitcoin Strategy ETF charges 95 bps in annual fees.
Bitwise Crypto Industry Innovators ETF (BITQ)
Bitwise Crypto Industry Innovators ETF helps investors capitalize on the wave of innovation. It tracks the Bitwise Crypto Innovators 30 Index, which measures the performance of the companies involved in servicing the cryptocurrency markets, including crypto mining firms, crypto mining equipment suppliers, crypto financial services companies, or other financial institutions servicing primarily crypto-related clientele (read: Bitcoin Reaches $42,000: 5 ETFs More Than Double in 2023).
Holding 29 stocks in its basket, Bitwise Crypto Industry Innovators ETF is concentrated on the top three firms. It charges 85 bps in annual fees from investors and trades in an average daily volume of 146,000 shares. Bitwise Crypto Industry Innovators ETF has attracted $135.1 million in its asset base.
VanEck Bitcoin Strategy ETF (XBTF)
VanEck Bitcoin Strategy ETF seeks capital appreciation by investing in bitcoin futures contracts. It is actively managed and offers exposure to bitcoin-linked investments through an accessible exchange-traded vehicle. XBTF does not invest in bitcoin or other digital assets directly and charges 66 bps in annual fees.
VanEck Bitcoin Strategy ETF has amassed $68.5 million in its asset base and trades in a volume of 34,000 shares a day on average.
Valkyrie Bitcoin Miners ETF (WGMI)
Valkyrie Bitcoin Miners ETF is an actively managed ETF that will invest at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations, and from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket, with a double-digit concentration on the top four firms (read: Bitcoin Miner ETF Tops in 2023: 5 Best Stocks).
Valkyrie Bitcoin Miners ETF has amassed $45 million in its asset base, while trading in an average daily volume of 248,000 shares. It charges 75 bps in annual fees.
Valkyrie Bitcoin Strategy ETF (BTF)
Valkyrie Bitcoin Strategy ETF is an actively managed ETF available through Nasdaq. It invests primarily in bitcoin and ether futures contracts. BTF has accumulated $37.9 million in its asset base. Valkyrie Bitcoin Strategy ETF charges 120 bps in annual fees and trades in a volume of 88,000 shares a day on average.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
