Exploring Bitcoin ETFs: How to Grow the Crypto Income in 2024

In the rapidly evolving landscape of cryptocurrency investments, the impending arrival of the first SEC-approved Bitcoin Exchange-Traded Fund (ETF) is creating ripples of anticipation. As the January 8th deadline came to a close, top asset managers eagerly awaited regulatory decisions, and income investors are now eyeing this development with hopes of elevating their passive cash flows.

Bitcoin ETFs hold the promise of unlocking the world of crypto for mainstream investors. If approved, these funds could become a gateway to hands-off digital asset income. Join us on this exploration as we uncover the mechanics of Bitcoin ETFs, delve into the escalating fee war among issuers, and discover how you might leverage these funds to enhance your bottom line.

How to Grow the Crypto Income with Bitcoin ETFs

Demystifying Bitcoin Exchange-Traded Funds

Exchange-Traded Funds have been instrumental in allowing investors to diversify their portfolios, ranging from stocks to commodities. With over $7 trillion in global assets under management, the versatility of ETFs is unquestionable. Now, the spotlight is on bringing Bitcoin into this mainstream fold.

Bitcoin ETFs would provide exposure to the world of crypto without the need to directly handle digital coins. Operating much like traditional ETFs, these funds would trade on stock exchanges, allowing investors to buy and sell shares seamlessly.

Key players like Ark Invest and Galaxy Digital are vying to launch the first SEC-approved Bitcoin ETF. Their filings outline robust security measures and structured crypto procurement strategies. While regulatory approval is pending, the groundwork is being laid for investors to access crypto through regulated avenues.

Read more: Crypto Predictions for 2024: Binance Loses Dominance, Coinbase Surges and Bold Market Forecasts

The Escalating Fee War Among Issuers of Bitcoin ETFs

Pent-up demand for crypto access has ignited fierce competition among ETF issuers. In a bid to attract investor capital, these managers are aggressively cutting fees, creating what experts predict will be an ongoing fee war.

“This will be a never-ending fee war,” forecasts Bloomberg analyst Eric Balchunas.
Firms are seemingly willing to sacrifice profits to undercut their rivals’ fees. With fee waivers, permanent fee reductions, and even a proposal for a completely fee-free ETF by Valkyrie, the landscape is evolving rapidly. Such fee-slashing is unprecedented, but issuers are likely betting on substantial inflows to compensate for the lost revenue.

The Escalating Fee War Among Issuers of Bitcoin ETFs

Unlocking Hands-Free Income Streams

The potential of zero-fee Bitcoin ETFs to enhance cash flow lies in a sophisticated options strategy called Selling Covered Calls. In a simplified explanation:

  • 1. Investors buy Bitcoin ETF shares for exposure to crypto prices.
  • 2. They sell call options to other investors, allowing share purchases at predetermined future prices.
  • 3. If share prices stay below the call strike prices, the options expire worthless, and sellers pocket the premiums as income.
  • 4. If prices surpass the strikes, buyers can exercise the calls, allowing sellers to sell their shares at a profit.
    This options overlay could generate regular income from Bitcoin ETF shares. UBS research indicates that covered calls increased S&P 500 returns by 40% over a decade. Now, a similar approach could unlock effortless crypto cash flows.

Gaining Exposure Through Retirement Accounts

The allure of Bitcoin ETFs extends beyond traditional taxable accounts. Major issuers are structuring their funds as ’40 Act ETFs, potentially making them eligible for inclusion in retirement accounts.

Investors may soon leverage their 401ks and IRAs for access to crypto markets. Bitcoin ETFs could provide tax-deferred exposure to digital currency prices. While the volatile nature of cryptocurrencies may not align with the stability sought by conservative retirees, the tax-advantaged exposure offered by these funds could present a unique income opportunity.

Waiting With Bated Breath

While the battle over fees continues, investors eagerly await the SEC’s ruling. Legal experts predict imminent approval after years of rejections, and the introduction of new mechanisms addresses previous regulatory concerns.

Even in the face of potential delays, access to crypto is expanding. In Canada, regulators have approved several publicly-traded Bitcoin ETFs. U.S. investors could gain exposure by purchasing shares of approved Canadian funds, highlighting the growing demand for access.

Bitcoin ETF Parallels to the Gold ETF Revolution

Parallels to the Gold ETF Revolution

Analysts draw parallels between the upcoming Bitcoin ETF launch and the gold ETF revolution of 2004. Standard Chartered Bank provides insights into this comparison, highlighting the potential inflows into Bitcoin ETFs.

When the GLD Gold ETF was introduced, the global gold market cap was around $2.2 trillion. Standard Chartered estimates that if Bitcoin ETFs mirror the subsequent $88 billion inflow into GLD, it could signify a potential $34 billion influx into Bitcoin ETFs.

Standard Chartered predicts inflows ranging from $50 billion to $100 billion into Bitcoin ETFs through 2024. Their estimations surpass previous, more conservative projections by other issuers, indicating a potential torrent of asset gathering.

Propelling Bitcoin to $200,000?

Standard Chartered further views ETF approval as a turning point for institutional crypto adoption, predicting Bitcoin could reach $200,000 by the end of 2025.

They note, “Gold prices increased 4.3x over seven years after introducing the GLD. We expect a similar magnitude rise in Bitcoin…in a shorter, 1-2 year timeframe given the dynamics of the crypto market and momentum from ETF launches.”

The Door Opens to Cryptocurrency Income: Create Your Crypto Assets

Bitcoin ETFs hold the promise of unlocking game-changing income potential through ordinary brokerage accounts. By streamlining access, these funds could usher in a new era of crypto cash flows. While the timeline for regulatory approval remains uncertain, the dawn of broader adoption inches closer each day.

Savvy income investors should prepare to capitalize fully on the launch of Bitcoin ETFs. The door to hands-off digital asset income is slowly creaking open, and 2023 could mark the pivotal year it swings wide for good. Position yourself now to turn crypto volatility into a steady stream of cash flow.

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