So, the dog caught the car. Now what?
Everyone always wonders what would actually happen if that proverbial dog that was always chasing cars actually caught one. Well the “dog” (ProShares) just caught its coveted Bitcoin ETF, sort of. It’s a Bitcoin FUTURES ETF. Big difference. But, at least at long last, the SEC finally approved a Bitcoin “flavored” Exchange Traded Fund, well then, yippee!
The big launch will be Tuesday the 19th (today, as I write this) and the ProShares Bitcoin Strategy ETF will trade under the ticker symbol “BITO” and be listed on the New York Stock Exchange. Once again, as everyone jumps up and down, the ETF will invest primarily in bitcoin futures contracts and will not directly invest in bitcoin. There is a huge difference between futures contracts and the actual underlying asset (Bitcoin). To dig deeper please see my recent article on this.
While attention will be focused on ProShare’s coup, even bigger Bitcoin news events are being somewhat ignored. Many who read this may know that earlier this year the Central American country of El Salvador made Bitcoin legal tender, and was the first country in the world to do so. That caught the attention of its neighbors (Panama, Belize, Nicaragua) as well as other Latin American countries and “lights started going off” for those countries to consider following suit. Well, as we predicted, the dominoes are starting to fall. Brazil has started down the road to make Bitcoin legal tender in the country. This is huge since Brazil is the sixth most populous country in the world. In other words, Brazil is El Salvador on steroids.
Now it’s not a done deal yet, but it’s coming. The Central Bank of Brazil reported that Brazilians have purchased more than $4 billion in cryptocurrency imports since the start of the year and are very crypto savvy. In fact, a member of parliament in Brazil wants to make Bitcoin a legal means of payment in his country. Legislation will be introduced soon. Although BTC has not yet to become legal tender in that country, as is the case in El Salvador, Bitcoin would be given the legal status of a “payment currency” if this initiative passes. So while investors here are jumping up and down because a Bitcoin futures ETF launched in the US, it appears that all of Latin America is considering making Bitcoin legal tender. Seems that Latin America at large may be looking at U.S. dollar diversification.
Glad I brought that up. There is another huge news event happening. Another huge country is considering moves away from the dollar. Russia. Russia aims to replace US dollar reserves with digital assets over the long term. One key reason for Russia’s de-dollarization campaign comes in line with the country’s efforts to avoid challenges posed by sanctions from the U.S. government. Obviously digital assets such as Bitcoin make holding and using dollars far less attractive.
So, the (currency) ground is shaking under all of us.
Brazil, El Salvador, Latin America in general and now Russia are sending the U.S. a warning. China already has done so with its digital Yuan. Don’t ignore these signals and movements. Who needs the US dollar anyway.
Focus instead on the SEC finally approving a Bitcoin futures ETF.