Bitcoin ETF Launch: Three Crypto Stocks May Face New Challenges
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Bitcoin ETF Launch: Three Crypto Stocks May Face New Challenges
With the launch of spot Bitcoin ETFs, traditional investors may prefer investing directly in Bitcoin rather than using these stocks.
Navigating Web3 tides with focused insightsBy Tom Carreras, DL News
Translated by Luccy, BlockBeats
Editor's Note:
The launch of Bitcoin ETFs marks a new milestone in cryptocurrency investing, with Bitcoin surging 6% and breaking above $49,000. However, analysts from Maple Finance and North Rock Digital point out that this victory could negatively impact certain crypto-related stocks such as Coinbase, Marathon Digital, and MicroStrategy.
Analysts argue that with the introduction of spot Bitcoin ETFs, traditional investors may now prefer direct exposure to Bitcoin over these equities. Each company faces unique challenges, signaling that the crypto market is entering a new era of competition. BlockBeats translates the original article below:
Spot Bitcoin ETFs launched in the U.S. this morning—an historic moment making it easier than ever for investors to gain access to the top cryptocurrency.
But analysts at Maple Finance and North Rock Digital say Bitcoin’s win could ultimately hurt crypto stocks like Coinbase, Marathon Digital, and MicroStrategy.
The crux lies in the fact that these stocks have historically served as proxies for traditional investors seeking exposure to Bitcoin without using Bitcoin futures ETFs.
With spot Bitcoin ETFs now available in the U.S., investors may now “shift from these less ideal instruments to the spot Bitcoin exposure they originally wanted,” analysts said.
Bitcoin rose 6% today, briefly surpassing $49,000 before retreating to around $46,000. Meanwhile, MicroStrategy dropped 4%, Coinbase fell 5%, and Marathon slid 14%.
Each company is grappling with its own distinct challenges.
Inherent Headwinds
“There’s no doubt Coinbase is a solid business, but ETFs introduce a lot more competition into the landscape,” Quinn Thompson, head of capital markets and growth at Maple Finance, told DL News.
SEC approval of ETFs sets the stage for a price war among fund managers. Cathie Wood’s Ark Invest will charge zero fees in the first year, while BlackRock charges 0.12% initially, rising to 0.25% later.
Coinbase told DL News it isn’t concerned about competition despite analyst scrutiny over its high retail trading fees.
According to CoinGecko, Coinbase traded over $2.2 billion worth of Bitcoin in the past 24 hours—a figure comparable to expected inflows into ETFs.
“Some estimates suggest $2 to $4 billion could flow into new Bitcoin ETFs in the first few days of trading,” Thompson said. “This represents a serious erosion of what was once a massive moat in the U.S.”
Meanwhile, Bitcoin mining firms like Marathon must contend with the upcoming halving, when the network cuts mining rewards in half. The event occurs every four years, with the next one expected in April.
As block rewards are halved, miner revenues will drop sharply, while their substantial energy costs remain unchanged—or even rise.
“The halving poses a serious risk to profitability, which can only be offset by higher prices (in my view, above $75,000) or significantly increased transaction activity and fees—two to three times current levels at least,” Thompson said.
“Higher-cost producers may face difficulties in the months following the halving,” he added.
According to a JPMorgan report from October, while Marathon is one of the world’s largest Bitcoin miners, it also has some of the highest power costs in the industry.
“This will likely force miners to issue more equity to extend their runways and dilute existing shareholders. It’s a proven strategy they’ve consistently used—so there shouldn’t be much surprise,” Thompson said.
“Gold ETFs and gold miners both exist in public markets, and people invest in them for different reasons. If they can coexist, why can’t Bitcoin ETFs and Bitcoin miners?” Charlie Schumacher, Marathon’s vice president of corporate communications, told DL News.
Schumacher added: “Overall, we believe this event is very positive for the industry, as it could attract more participants and grow the pie for everyone.”
Regarding MicroStrategy, the report notes that its stock currently trades at a significant premium to the fundamental book value of the business—that is, the value of the operating company plus its holdings of 189,150 Bitcoins.
However, analysts say uncertainty around potential sales of its Bitcoin holdings, combined with co-founder Michael Saylor’s recent sale of company shares, exposes the investment to additional downside risks—making it a riskier proposition than simply gaining exposure via a Bitcoin ETF.
The report compares MicroStrategy to Grayscale’s Bitcoin Trust, which traded at a premium for years “but reversed and began trading at a discount when the asset fell out of favor due to better alternatives and deteriorating sentiment.”
Coinbase and MicroStrategy did not immediately respond to requests for comment.
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