The Best Ways to Play a Bitcoin Spot ETF

Filtered: Nov. 10 – 17

Fake ETFs seem to be all the rage in crypto these days. 

Last month, we got a false news report that BlackRock’s spot Bitcoin (BTC) ETF got approved, which saw BTC spike 10% higher. 

And now this week, another ETF with BlackRock’s name on it, this one for Ripple (XRP), turned out to be fake as well. 

Still, all these red herrings haven’t shaken crypto’s faith that a spot BTC ETF is coming, either through BlackRock and/or any of the other dozen companies that have filed (real) applications. 

Which means the best time to prepare is now. And that’s why you’ll want to listen to the latest two-part xChanging Good show, where we tried to answer the question, “How can you make 10x gains off the potential approval of a Bitcoin ETF?”

In Part One, we focused on how to position yourself before the ETF gets approved. One of the ideas we discussed was Bitcoin miners, several of which popped double-digits on Wednesday (we recorded the episode on Tuesday, but it still holds). 

But as I explained on the episode, this could be just the beginning. I expect miners to be one of the big beneficiaries of an ETF approval because of what I call the “Bitcoin milkshake” – basically, the idea that when crypto takes off again, BTC will first suck up all the liquidity, and there will be a delay until that liquidity trickles down into altcoins. 

And we can measure this by tracking BTC dominance, a measure of its market share based on the total crypto market cap of almost $1.5 trillion:

I mentioned this Bitcoin milkshake. It's been progressing over the past few months. I think just since early September, [BTC dominance] has gone from 48% all the way to nearly 53%. And for a market that's almost $1.5 trillion, that's a lot. That is a big move. 

And when we look at the ETF [coming] ... when Bitcoin just takes the whole gravitational pull of the ecosystem and all the liquidity starts to move into it, where are you looking?

I'm not quite convinced that Bitcoin is going to be able to do 2x and 3x in that time period. And that's why I'm looking at miners for that specific reason. I think of the analogy with gold from back in the day. [Gold] miners had this 10x ability, while gold was going to get you 10%--20% possibly over the next two years.

I think a lot of the individuals that are going to be investing within the equity markets are going to be those that have that mentality. [Since we] are crypto-native, we kind of look past that. 

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But if you want to use the boomer mentality, I think that miner narrative is going to grab hold of a lot of the market, and it's going to be a quick move. 

Not everyone on the pod agreed with me regarding miners (Twitter/X isn’t the only place I like to get into debates, if you don’t know.) 

Meanwhile, my friend and colleague J.J. cautioned while a spot ETF approval would be a huge boon for crypto, it’s likely a “buy the rumor, sell the news” event. 

In fact, we have an idea of how the market would react to an event based on recent history. Here’s what J.J. said:

In my mind, I do think [Bitcoin’s] going to drop when we have the ETF launch ... Where's that demand going to come from? But I do think it's going to come ultimately, sadly, from people's retirement portfolios and whatnot that get sold these things as soon as they go live.

And we saw that with the futures ETF. When that went live, there was actually a tremendous amount of volume the first day. And then it just fell off a cliff. Basically, people were kind of buying the top there unwittingly. A lot of it was probably the retirement accounts and whatnot. And I think that that retail presence is usually the final wave of liquidity.

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I do think if we get the spot ETF, it's probably going to lead to a blow-off top, whether or not that's a long-term blow-off top, like over the course of years, or if it's just going to be a couple of weeks or whatnot. 

So I just want to be mostly de-risk in the event that we get a spot ETF listing. And then ultimately wait for some kind of dislocation event. My long-term mental model is after the ETF, then we get a big wipeout that obviously makes you want to go back to BTC following that.

If you’re looking for more strategies to play a BTC ETF before, during, and after one gets approved, listen to Part One right here. J.J. also shared a strategy to profit using options…and our token design expert Kodi shared a potential multi-tiered altcoin ecosystem play he’s eying. 

In Part Two, which drops this Sunday, we looked at what to expect for Bitcoin in the long term after the ETF arrives. Here’s a snippet of my thoughts:

So what is Bitcoin going to look like when it comes to 2026, 2027? Right now with this ETF in this cycle, I want to prepare for that move for Bitcoin, because at the same time, if there's that much money coming into the space, one of the big issues holding us back right now is the amount of capital flowing in.

Right now, you have an asset that is getting the hat tip that it's okay. Everybody can talk about it at the various tables that they're all sitting at. And now, VCs can point to various funds that are going to allocate.

And now you have Ordinal projects that are starting to gain some traction. They have a little maturity. They go now from seed rounds into Series A and Series B, and now you're talking about much bigger rounds in terms of capital flowing in and projects with starting to get full developer teams that are not just like three or four people. You're talking a few dozen individuals are working on a project moving into this march higher.

And those [catalysts] can bring that demand to the network. You have the drift higher from Robo-advising. This is setting up to be a massive move. I think in the next cycle…10x might be understating what could possibly happen here.

Again, check out Part Two on Sunday. And be sure to subscribe to the xChanging Good YouTube channel here to catch all the episodes as soon as they launch. 

That’s all from me. Enjoy the weekend.

Your Pulse on Crypto,

Ben Lilly

P.S. Filtered will be off next week due to the Thanksgiving holiday in the U.S. We’ll be back at it the following week.