Sometimes there is nothing to do but marvel at crypto’s refusal to die. One bitcoin is worth more than $51,600 as I’m writing this, more than tripling from its post-FTX low. The reason here is simple: After years of criticism that bitcoin had no useful function other than money laundering, the crypto industry has finally found a way to — just kidding! Nothing has changed about it, except that now you can buy an exchange-traded fund from Wall Street giants that gives the average investor (including 401k holders) direct exposure to the cryptocurrency. ETFs are just consumer-friendly ways to buy investment products as simply and cheaply as you might buy shares of Apple stock; in the past, buying bitcoin often meant signing up on crypto-specific platform like Coinbase or Binance.
The big financial companies that are offering the new products are seeing money stream into them, well above what was projected. It’s getting to be so wild that BlackRock’s bitcoin product has already become one of the world’s bigger ones (in a multitrillion-dollar space) after just one month:
$IBIT is popping off, took in nearly half a billion all by itself yesterday, showing an unusually strong second wind for a new launch, is now over $5b which puts it in Top 7% of all ETFs by size in just 23 trading days. pic.twitter.com/T5uCdschrG
BlackRock isn’t alone here. More than $11 billion has flowed into bitcoin ETFs since federal regulators approved them last month. Fidelity, ARK Investments, and crypto-focused Bitwise have also brought in more than $1 billion in assets during that time, according to CoinDesk. While these are small sums relative to bitcoin market value of $1 trillion, they are certainly enough to (in theory anyway) move the price day-to-day.
One of the fun things about money is how it finds new ways to reveal its strangeness, and this has been especially true with the development of the crypto industry. It is true that bitcoin’s function as an actual currency is kind of shoddy. It is more expensive and less convenient to trade when compared to, say, the U.S. dollar. Its utility for privacy is overblown. The argument that it is a store of value — that is, a good way to protect your money — would be immediately and obviously wrong to anyone who looked at the sharp highs and lows on a price chart. So when the ETFs of bitcoins were approved earlier this year, their prospects were an open question. After all, these were funds of bitcoins that would track the ups and downs of a thing that arguably doesn’t have any inherent tangible value and that is prone to plunging by 80 percent at the drop of a hat. Why would that be worth something?
But, apparently, the bitcoin ETFs are popular. Perhaps it’s because they make it easy to buy and sell, and anyone who is feeling a speculative itch — or is just bitcoin curious — can instantly make them part of their retirement account. To the extent that there is a fundamental reason behind it — the way that, say, you think more people will buy iPhones, so you buy Apple stock — well, that is less obvious.
But then again, crypto has been around long enough that these puzzled questions are very familiar by now. Did the price of bitcoin rise by nearly $3,000 because Jack Dorsey wore a Satoshi sweater while hanging out with Jay-Z and Beyoncé at the Super Bowl? Maybe! Clearly, bitcoin is worth as much as it is because that’s what people want to pay for it, and because Wall Street wants to sell it — isn’t that good enough?
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