BITO is Intriguing, but It Won’t Help You in the Metaverse
Hide the beer. Your parents just came home. The crypto space, long viewed by financial professionals as a playground for “amateur” investors, has gone mainstream. On Tuesday, October 19th, 2021, ProShares, an established player in financial services, launched the Bitcoin Strategy ETF (BITO). It’s the first of its kind, and it’s SEC approved.
ProShares CEO Michael Sapir told us to “mark the date.” Forbes called in the “new GLD.” Seeking Alpha described it as a “game changer.” I’m seeing it as intriguing, but it won’t help me in the Metaverse. I’ll need real Bitcoin to operate there, not an investment ETF that tries to predict crypto futures. BITO is legitimizing DeFi. That doesn’t really turn me on.
BITO doesn’t offset the volatility in the crypto space that we’ve all become accustomed to. When GLD, which is a gold ETF, was launched in 2004, the price of gold rose. It spiked at $177 in August 2011. This morning, it was at $166. Two days after the BITO launch, Bitcoin (BTC) went to $66K and then started dropping. Sigh. Yawn. Same old story.
Bitcoin will be the Medium of Exchange in the Metaverse
Like most seasoned crypto investors, I buy the dips. Bitcoin hitting an all-time high doesn’t excite me. Watching it level off above what I paid for it does. I don’t look at crypto as an investment. To me, it’s cash for the new virtual universe. Pieces of the Metaverse have already been built. We’re just waiting for someone to connect them all together.
BITO is an investment, and a not a very good one. If you’re going to assume risk, sign up for a crypto wallet at Coinbase (COIN) or Robinhood (HOOD) and start buying the actual coins. Personally, I stick to Bitcoin and Ethereum, but you can play with other altcoins if you choose. The point is to focus on the currency, not ETFs that track price changes.
After all the hype and fanfare, BITO opened at $40.99 on the 19th, spiked to $43.80 in twenty-four hours, and currently sits at $41. Bitcoin, over that same period, went from $62K to $66K to $63K. For those who treat crypto as an investment, those numbers should speak to you. Don’t waste your money on BITO when you can get a bigger return with BTC.
Investing in the Metaverse Now is a Bold Move
In my thirty years of investing, I’ve often been a part of conversations that started with, “If I only got in early, I’d be rich now.” History is filled with ten-baggers and unicorns that early investors cashed in big on. The Metaverse is ten years away from global adoption, but the time is now to find those hidden gems that will explode when it goes live.
Facebook (FB) is in the news for rebranding as a metaverse company. They have the user base, own Oculus, and are hiring a European dev team to connect 3D virtual worlds. That’s strong positioning, but I’m not betting on them. Sony (SONY) and Microsoft (MSFT) both own significant market share in the VR/AR market. Both are more appealing to me.
Remember “Ready Player One?” It will be gamers who control the Metaverse, so the pony I’m betting on in this race is Roblox (RBLX). The multi-game platform has already been developed for metaverse connection and they have 43.2 million daily active users. Facebook has two billion, but they’re not gamers. Most of them are just watchers.
There are a few ETFs in the Metaverse space, but I’m holding off on those for now. It’s too early to bundle equities when the players are not all present yet. My dark horse for today is Autodesk (ADSK). The AutoCAD giant now offers a suite of tools for 3D rendering and constructing virtual buildings. Their stock is up 20% over the past twelve months.