Are Bitcoin's Best Days as a "Novelty Trade" Behind It?
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Bitcoin has long been highly-correlated with the tech-heavy Nasdaq as a barometer of risk-on or risk-off sentiment. That Bitcoin has recently, and significantly, lost some of its relative strength against the Nasdaq could be construed in 2 ways:
1) It's a foreshadowing of a coming risk-off sentiment that will negatively impact the tech sector and broader market, or 2) Bitcoin was not only “sold on the news” after its huge rally spurred by the SEC approval of spot Bitcoin ETFs, but that it’s also starting to lose its novelty & luster as a unique speculation or “investment” tool.
Bitcoin is now an ETF, there are over three thousand of them. And like any other asset, it has to seamlessly compete with other assets for investor dollars. i.e. The risk-free rate of return you can get in short-term Treasuries, its revenue and earnings growth (zero), dividends paid (zero). Bitcoin proponents have long argued and hoped that it would become the “new gold.” But gold is shiny, you can hold it, and it can be functionally utilized as a central bank reserve holding as a store of value and to hedge the dollar.
Also, if you’re a Bitcoin Bros, and you see Nvidia and Microsoft, etc., continually pumping out big AI revenue and earnings gains, how long can Bitcoin really maintain its sexy novelty luster when the spot ETF hope trade is old news? It’s now also much easier for traders and hedge funds to short Bitcoin — balancing out the ledger, so to speak.
Food for thought.