Market Milestones: ETF War

[Image] Happy Friday , This week, the SPY continued its grind higher, reaching ever closer to its all-time highs. The dip was short-lived, only lasting one week and filling only the most aggressive of limit buys. A slightly hot CPI tried to derail the bull train but only managed to cause a half-day of selling before the bulls were back on track. There are strong, high-volume, bearish hammers on all of the market indices. The hammer candle is one of the most famous candlesticks around, but its placement on the chart is key. If you see a hammer after a retest at the low, it’s bull time. However, if you see a hammer at a new high and then its low gets swiftly taken out, welcome to bear o’clock. Sure, there is the chance of a larger retest present, but the markets are in a clear bullish trend, and big tech has taken the lead once again as small caps chop lower. NVDA, MSFT, and META all seem to be on a mission to the moon. One chart that does look a little concerning is AAPL. AAPL, at the time of this writing, is the biggest company in the world, the biggest component of the QQQ, and the second-biggest component of the SPY. The market is rewarding A.I. companies right now, and let’s face it, AAPL is just not cutting it in that department. I mean, have you talked to Siri lately? That girl may be artificial but is anything but intelligent. Sure, they make 100 billion dollars a year, but with iPhone sales sliding and Siri answering every question with a bad article from the internet, the market may be tired of this big dumb cash cow. AAPL has a strong weekly gap down that could be the start of a bigger downtrend if the 200DSMA does not hold. SPY [Image]( AAPL [Image]( [Image] Bitcoin went public on Thursday, January 11th, 2024, as 11 spot bitcoin ETFs began trading. This momentous occasion happened 15 years after bitcoin’s genesis block was mined on January 3rd, 2009. We cannot dive too deep down the rabbit hole in this email, so let’s just cover the basics. An ETF or Exchange Traded Fund is a public investment fund traded on the stock exchange that tracks the performance of a specific index or asset class. A spot ETF, unlike a futures ETF like BITO, tracks the current or “spot” price of the underlying asset it represents and has to acquire and hold that asset. This means that when you buy a bitcoin ETF, you are not purchasing bitcoin, but instead purchasing shares of a fund who will purchase and hold bitcoin. The funds price fluctuations should match those of Bitcoin, giving the ETF holders exposure to Bitcoin with the click of a button in their traditional trading account. The approval of these bitcoin ETFs has given everyone with a brokerage account an easy way to allocate a portion of their portfolio to bitcoin. This intersection between traditional finance and decentralized finance allows for mainstream adoption and an easy on ramp for institutional investors who want some of that sweet, sweet bitcoin alpha. It also gives bitcoin, and to a lesser extent the entire digital asset space, a stamp of legitimacy and approval. This is driving the anti-bitcoin crowd like Elizabeth Warren, Jamie Dimon and Gary Gensler absolutely bananas, which is just icing on the cake. The fee wars have been heating up between all 11 of these ETFs. The ETF with the highest fees and also the most AUM is Grayscale (GBTC) at 1.5%. GBTC was converted to a spot ETF from a Bitcoin Trust and has actually lowered its fee from 2.0%. They seem to be banking on the fact that most holders will stick with them for tax reasons and for the trusted name and liquidity. There are several of the ETFs that are coming out the gate with a 0.0% introductory fee for the first several months and most of the bunch are sitting in the 0.2% to 0.4% range. There will likely be one or two winners in this ETF battle and that winner will hold the majority of the AUM and have the most liquidity. Top contenders are Grayscales GBTC because of their head start and BlackRock’s IBIT because of their name and size. With any ETF, there is counterparty risk, so the more trusted and know the issuer, the better position they will be in. I am personally rooting for VanEck in this ETF battle. My reasoning is very simple. First, they are a crypto friendly company and second their ticker is HODL. I also think that these ETFs will be a wonderful way to trade bitcoin going forward. Crypto exchange fees are often exorbitantly high and even if they come down as a result of these ETFs, they will likely still be higher than a traditional broker when trading. Trading in a traditional broker is also going to make tax accounting so much easier and possibly one day provide the option for options. If you increase the demand of a product by making it easier to buy and hold and then you decrease the incoming supply (the halving), one could say you have created the perfect storm for bitcoin to continue trending higher over time. What do you think about the bitcoin ETFs and which, if any, do you plan on trading and owning? [Send us an email and let us know.](mailto:support@thetradersplan.com) mailto:support@thetradersplan.com Strive On, Yates Craig, RLTN Market Analyst Disclaimer: Trading involves inherent liabilities and risks. By accessing this newsletter, you acknowledge and understand the associated risks with trading and investing. This newsletter or email does not serve as a solicitation to buy or sell any security, and its content should not be construed as financial advice. The trades, analyses, and results presented are for entertainment and educational purposes only. These materials do not substitute professional advice from a qualified individual, firm, or corporation. 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