Buy The Rumor, Sell The News May Not Apply To Bitcoin - Grayscale Bitcoin Trust

This piece was originally published on December 22nd, 2023.

There’s an old saying on Wall Street, “buy the rumor, sell the news”. There’s often some truth to it. Professional investors tend to be forward-looking and buy stock ahead of an event. Once the event takes place, their reason for owning it disappears, and they sell. I’m seeing a lot of talk both on Twitter/X and in today’s Wall Street Journal about how Bitcoin will fall after the SEC approves ETF applications.

Bitcoin has always been volatile, and a price decrease can happen at any time including after SEC approvals are secured. Still, I see this one differently. Many institutional investors and pension funds are required to only own assets that can be held in a brokerage account. I’ve spoken with a number of wealth advisors and RIAs who say their compliance departments won’t let them buy $GBTC GBTC right now. That means they have no way to get their clients direct exposure to Bitcoin.

ETF approvals would change that. Multi-trillion-dollar asset managers like Blackrock and Fidelity would be freed and encouraged to take advantage of institutional money that wants exposure to one of the best performing assets of 2023, and to something that provides counter-exposure to the continually debased fiat dollar. In this case, the news would be an event which would free large firms to market Bitcoin ETFs and allow financial advisors to finally get their clients some exposure.

As of now, Bitcoin issuance is about 900 coins a day. That will be cut in half in the next few months. So, we have a decreasing supply issuance ahead of a real possibility of a large increase in demand. The only thing that can adjust is the price. I can’t tell you if the next 20% move in Bitcoin is up or down. I can tell you that the reasoning behind the old “buy the rumor, sell the news” saw doesn’t make sense to me in this case.

GB@DeepKnowledgeInvesting.com if you have any questions.

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