Bitcoin Can Compete With S&P 500 ETFs

At the Bitcoin Atlantis conference in Madeira, Portugal, MicroStrategy Inc. Chairman Michael Saylor discussed Bitcoin and other topics with podcast host Natalie Brunell. One of the points of conversation surrounded the recently approved spot Bitcoin exchange-traded funds ETFs and their ability to compete with other top asset classes and ETFs.

“We thought that maybe Bitcoin was a competitor to gold, but it has actually run up the leaderboard, and now it’s starting to nip at the heels of the S&P 500 Index ETFs,” Saylor said.

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Bitcoin and gold are viewed somewhat similarly by some investors, as they have a limited supply and can be seen as a hedge against inflation. However, gold has been around for millennia, while Bitcoin is barely 15 years old. Bitcoin has quickly risen the ranks and Saylor no longer sees gold as the main competitor to Bitcoin from an investment perspective.

Instead, Saylor believes that Bitcoin has the potential to compete with the largest ETFs in the world, namely the S&P 500 index ETFs, such as SPDR S&P 500 ETF Trust (NYSE:SPY) and iShares Core S&P 500 ETF (NYSE:IVV).

In terms of market cap, the S&P 500 is leaps and bounds ahead of Bitcoin. It has a market cap of over $40 trillion, well above Bitcoin’s $1.3 trillion. However, Bitcoin’s recent performance, according to Saylor, could be a sign that Bitcoin is ready to compete with some of the largest funds in the world.

The spot Bitcoin ETFs were launched less than two months ago but have already surpassed more than $50 billion in combined total assets, according to Bloomberg senior ETF analyst Eric Balchunas. The ETFs also saw a record amount of inflows during their first 30 days.

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“These ETFs opened up an entire financial world of awareness, opportunity and functionality to the 99% of mainstream investors. You really can’t underestimate just how profoundly important that is to the entire network,” Saylor noted.

Saylor and Microstrategy are the largest institutional holders of Bitcoin, amassing a stash of 193,000 Bitcoins over the past several years. The investment as a whole is up more than 100% and is currently worth over $13.5 billion.

Despite the hugely successful investment, Saylor does not see the company selling any time soon. When asked about a potential exit strategy, Saylor said, “Bitcoin is the exit strategy.”

Not only does Saylor not see an exit in the near future, but he is also taking on debt to buy more Bitcoin. MicroStrategy recently sold $700 million of convertible senior notes to buy even more Bitcoin.

As Bitcoin and spot ETFs continue to perform well and see more investment, it will be interesting to see how it plays out. Will Bitcoin ETFs catch up to the S&P 500 ETFs? Only time will tell.

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