Bitcoin setting up for major disappointment

Bitcoin is setting up for a major disappointment. Nothing changed between now and a month ago except the price is $9,000 higher. There is no indication that the ETF will be approved or that any progress is being made. As soon as it dawns on market participants that the ETF will not be approved, or at least not as soon as hoped, the price will crash to $25k or so, where it was before the hype began. This is already happening now, as it has fallen $1,000 today. I entered a new short position at $37k, and still am short from $28k, which is underwater, but I will come out ahead on that too. It’s rare that you find such a good opportunity to make money as shorting Bitcoin has been.

A few days ago I was watching a video by “Tech Lead”. He says that Bitcoin offers good risk vs. reward due the inevitability of the ETF being approved. I am embarrassed to have ever watched his content. He has no idea what he is talking about. No, Bitcoin will not make him rich, but his video will get a lot of ad revenue, which will make him rich. I dunno why so many people assume he is smart…people like myself and those who read this website are way smarter. He’s good at appearing smart but his advice and reasoning is plain dumb.

The risk the reward is unfavorable. If he is right, maybe Bitcoin will go up another 5% or so, as the news is already priced in, and market participants are convinced the ETF will be approved. But if it’s rejected or delayed, which if history is any clue is close a certainty, the downside is possibly 20% or more. That is a pretty terrible asymmetry, in which one assumes a large risk for a relatively small upside. In trading parlance this is called picking up pennies in front of a steamroller. You can just stick you money in risk-free 6-month bills and made that 5% instead of dealing with Bitcoin at all.

Second, even if you are bullish on Bitcoin, there is no reason to buy it compared to investing in single-stock leveraged ETFs, which have more upside and less volatility compared to Bitcoin, which is what I have been doing for the past year with great success. Just because you are bullish on something  does not mean you have to own it when there are superior alternatives. Even if you think the ETF will be approved, I would still rather own Meta stock instead. Meta is up almost 200% for the year, far-exceeding that of Bitcoin, and with a much smoother and nicer chart.

He says the ETF is inevitable because it’s the next logical step for Bitcoin given that there are already many other ways to buy it, such as brokerages and futures. This contradicts his earlier argument because if there are already so many ways to buy Bitcoin, why does anyone need the ETF in the first place? The ETF is redundant when it’s already very easy to buy crypto or derivatives of crypto, like on Fidelity, Coinbase, CME futures, Robinhood, etc.

Forth, he confuses correlation with causation by assuming that history will repeat if a Bitcoin ETF is approved. Gold prices surged 300% from 2004-2010 as part of a broader commodities rally and cycle, not necessarily because it had anything to do with the SPDR Gold Shares (GLD) ETF being approved in 2004.¬† Gold surged during the ’70s despite the absence of any ETF.

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