Something Is Happening With Bitcoin That I Would Have Never Expected: The BTCO Case

Summary BTCO is a spot Bitcoin ETF with a 0.25% TER, liquid, and with externalized custody. It replicates the underlying BTC-USD well net of fees, with a linear performance relative to peers. I am looking with interest at the divergence that has formed relative to the performance of US equities. Especially in a context of prospective monetary expansion: an element that typically works in favor of assets like Bitcoin. From a technical perspective as well, it is trading within a range that, in my opinion, allows risk to be managed strategically. Today something is happening on Bitcoin that I haven’t seen for quite some time. Something that naturally is also reflected in the ETFs that replicate its performance, in this sense also on the Invesco Galaxy Bitcoin ETF ( BTCO ). I am referring to 2 very interesting divergences: the one with the S&P 500 the one with global liquidity. These are 2 elements that can easily be interpreted negatively: as a relative weakness of Bitcoin. And yet, personally, I interpret them positively. And before explaining why … What is BTCO BTCO is a spot Bitcoin ETF , with the objective of replicating the spot price of Bitcoin, net of costs. BTCO - Profile (Seeking Alpha) These amount to an expense ratio of 0.25%, fairly competitive, if one considers a bid/ask prem/disc of -0.02% and a bid/ask spread of 0.08%, a sign of positive liquidity . BTCO - liquidity grade (Seeking Alpha) In this sense, naturally, the number of bitcoins per share decreases over time , even if Bitcoin rises. This is because each Sponsor Fee is paid by selling bitcoin, generating an effect of structural economic dilution and inevitable underperformance vs BTC spot in the long term. BTCO - expense grade (Seeking Alpha) For replication it uses the Lukka Prime Reference Rate ( USD ) mechanism; essentially it has prices aggregated from multiple exchanges to determine a fair value and then the NAV that moves synchronously with the underlying. It then uses an external custody mechanism at Coinbase Custody Trust Company, LLC. Peer comparison For completeness, I’m also sharing my peer table, although I want to point out that, after several comparative analyses, I’ve come to the conclusion that the key decision lever should be fees. BTCO - peer comparison (Seeking Alpha) Specifically, BTCO does not have fees that are clearly higher than peers with larger AUM, such as FBTC in this respect , and IBIT . For this reason, in terms of performance there are no major deviations. To go deeper, I invite you to read here . BTCO - peer comparison (Seeking Alpha) Something is happening that I didn’t expect Those who follow me know that I usually analyze Bitcoin’s performance in comparative terms. I don’t appreciate the maximalist dynamic that sees Bitcoin as “the asset that will save us all no matter what.” Simply, it is an asset that, by following this narrative, is achieving great results, and as an analyst, I simply go along with it. To enter the market through ETFs, in the past I have oriented myself by following two parallels that have always brought me great satisfaction . 1. Bitcoin & S&P 500 Bitcoin, therefore the ETFs that use it as the underlying (in this case BTCO), for me is a high beta solution of the S&P 500 (and of the Nasdaq index). It means that it amplifies rises and falls in the same way as a technology stock (basically). Or rather … this is what has guided my research over the past years. But look at what happened today. BTCO - SPY - price (Seeking Alpha) There has been a strong divergence between Bitcoin and the performance of traditional markets. And this, in my experience, and in my opinion, can be read in 2 ways: A positive gap between prices that will facilitate Bitcoin’s growth. A negative gap that anticipates a collapse of the S&P 500. But let’s move on to the second … 2. Bitcoin and global liquidity Bitcoin has a strength (not so common): it has a limited, or better said, predefined supply . Being therefore a “fixed-supply” asset, and freely accessible, it means that if liquidity in circulation increases, the price undergoes (in my opinion) a natural revaluation. For this reason there is a tight correlation between Bitcoin and money in circulation M2 (as is also the case for the S&P 500). US M2 money supply (ycharts) And it so happens that this is at all-time highs, while the price of Bitcoin instead is declining. Well … in my opinion, this is an important asymmetry to consider. My opinion on BTCO Does it make sense to expect a decline in the S&P 500? Certainly, the “unpredictable” exogenous shock is always around the corner, but if as an analyst I had to simply rely on today’s expectations, I don’t see the reason. Revenues and earnings are expected to grow strongly according to FactSet . S&P 500 revenue growth CY 2026 (FactSet financial data and analytics) In the same way, liquidity is expected to expand on multiple fronts: Fed cutting rates, especially after the DOJ accusations against Powell . The unconditional QE of the US government with Fannie Mae and Freddie Mac . And the resumption of monthly expansions of the Fed’s balance sheet. And if these 2 elements are considered sufficient drivers to describe Bitcoin’s performance (as has been the case in the recent period), I think it is more likely that the gap anticipates potential recoveries by Bitcoin, rather than a contraction of the general market. Risk Naturally, this is a forecast based on two arbitrary, and not absolute, conventions. In the sense that it is assumed that Bitcoin maintains an anchoring to these correlations, simply because in the past it has been so: this also means assuming that market habits never change. But this in itself is inconsistent with the very nature of the market. Just think of when Bitcoin was instead called “digital gold” and reacted positively to systemic shocks and geopolitical risks; which is completely inconsistent with the “new conception” of Bitcoin (the one I presented here). In fact, exactly the opposite would happen. So? The risk is that Bitcoin simply changes its conception. BTCO - price (Seeking Alpha) How do I manage this risk? well, I work on the technical side. BTCO today is in a price range on which I can try to set accumulation strategies with controlled risk. Quite simply, in the area below 50 RSI points within the range and slightly below it, I can try to accumulate a position, to be managed with controlled risk. Conclusion These 2 divergences encourage me to maintain a positive rating (BUY) on BTCO. Why? Looking at the nature of the ETF, I consider it competitive in the market. Looking at intermarket analysis, it seems it can be positively influenced by the S&P 500 and the liquidity boom. Looking at the chart, it is located in an area where I can try to work.