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To investors,
We are on the precipice of one of the largest marketing blitzes in the history of financial markets. The bitcoin spot ETF is rumored to gain approval in early January 2024, which will kick off a global competition between financial heavyweights for billions of dollars in assets under management.
Let’s dive into some of the numbers.
When the ETF is approved, it is likely that $50 billion - $100 billion will flow into the various funds within the first 12 - 24 months. The approval of a futures bitcoin ETF was the fastest growing ETF in history, with approximately $1 billion invested into the fund in the first 48 hours, so we should see quite a bit of exuberance around the spot bitcoin ETF.
Additionally, Grayscale’s GBTC had about $40 billion market cap in the 2021 bull market. Even though it was a less ideal trust structure, this signified how much investors wanted bitcoin exposure via public markets.
Given these prior data points, we can assume the $50 billion - $100 billion number for ETF inflows. GBTC currently charges a 2% management fee. ProShares charges 0.95%. Let’s handicap the probable fee structure at a 1% management fee for easy numbers. This means $500 million to $1 billion is up for grabs in annual revenue to the winners of the ETF asset race.
What would you do if you were the ETF issuers that get approved?
Spend an insane amount of money to capture as much market share as you possibly can. We know from previous ETFs and markets that ETF AUM tends to be fairly sticky. Once a clear winner has been established, it tends to keep the dominant position.
Liquidity begets liquidity. Assets attract assets.
This is why I believe we will see the most insane marketing blitz in the history of financial markets in 2024. In my estimation, asset managers will collectively spend $100 million or more trying to woo investors and capital to their respective ETFs.
There will be PR wars waged on the front pages of financial media. CEOs will be paraded around television news outlets as much as possible. There will be TV commercials. Super Bowl ads. Full page takeovers of newspapers. A flood of content on every social media platform. And billboards everywhere.
Finance has never seen what is about to happen.
But the reward is not only $500 million to $1 billion. The reward is that amount of money EVERY YEAR for the foreseeable future. Sure, there will be fee pressure over time, but for the next 5+ years, the ETF winner is going to capture billions of dollars in revenue.
How much would you spend on marketing to capture $1 billion in annual revenue?
A lot.
We are about to find out the exact answer for BlackRock, ARK, Fidelity, Bitwise, and many others. The blitz is coming. It will be so epic that you will be tired of the ads. Everywhere you turn, someone will be asking you to invest in the bitcoin ETF.
This is what bull markets are made of. And bitcoin is poised to benefit.
Have a great day. I’ll talk to everyone tomorrow.
-Anthony Pompliano
If you enjoyed this letter, you should consider subscribing to the Pomp Letter. I write 3-5x per week and explain in simple language what is happening in the economy, financial markets, and bitcoin.
Anthony Pompliano sat down with CNBC's Talia Kaplan.
Topics include Federal Reserve, financial markets, interest rates, bitcoin, why he expects capital to flow into the asset class, and why he believes bitcoin bull market has begun.
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Anthony Pompliano’s Full Interview with CNBC
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