BRRR May Be Losing The Race As A Bitcoin ETF

Summary BRRR offers secure, direct spot bitcoin exposure via cold storage but lacks differentiation beyond fees and liquidity compared to ￰0￱ ETFs, including BRRR, are highly correlated with equities and US rates, raising questions about true decentralization and concentration ￰1￱ IBIT’s superior liquidity and similar fees, I rate BRRR as Hold, seeing better alternatives for bitcoin ETF ￰2￱ CoinShares Bitcoin ETF ( BRRR ) is an investment strategy designed to provide investors with direct exposure to spot ￰3￱ strategy utilizes cold storage for holding assets, creating a differentiated and more secured strategy for investors seeking exposure in ￰4￱ was launched on January 10, 2024, following the approval by the SEC for the launch of bitcoin spot ￰5￱ acts as the sponsor of BRRR, while US Bancorp Fund Services is the ￰6￱ utilizes Coinbase Custody Trust Company ( COIN ), BitGo Trust Company, and Komainu Limited for custodian ￰7￱ is indexed to the CME CF Benchmarks Bitcoin Reference ￰8￱ utilizes cold storage with its custodians in the Vault Account, meaning that the bitcoin held is stored offline, disconnected from the ￰9￱ can add a certain layer of safety protocol to the assets as cybersecurity risks are generally ￰10￱ Alpha BRRR charges a sponsor fee of 25bps, in line with peer bitcoin ￰11￱ all intents and purposes, bitcoin spot ETFs have no differentiation in terms of investment strategy, each moving in tandem with the price of ￰12￱ core differentiators will be fees and ￰13￱ comparison, I believe that the best bitcoin spot ETF to invest in would be the lowest of cost ETF that provides enough liquidity with minimal spread ￰14￱ a fee perspective, VanEck’s ( HODL ) may prove to be the most appealing on the market as the sponsorship fee is waived until January ￰15￱ Alpha Aside from fees, a major differentiator may be assets under management and fund ￰16￱ of the bitcoin ETFs have remained relatively stagnant since launching at the beginning of 2024 in terms of net asset growth, while BlackRock ( IBIT ) has consistently grown above all ￰17￱ that bitcoin ETFs may be used for liquidity in the market, ETF liquidity may be just as important as investing in a low-fee ￰18￱ has roughly $655mm in assets under management with an average of 186k shares changing hands on a daily ￰19￱ comparison, IBIT has accumulated roughly $84b in net assets since launch and has an average daily trading volume of 45mm ￰20￱ ETF Fund Flows From a tactical perspective, BRRR is directionally correlated with the S&P 500 ( SPX ) to a certain ￰21￱ estimate that bitcoin has an 83% correlation to the SPX.

I believe that the driving factor behind this high level of correlation is the broad adoption of investors holding bitcoin ETFs within retirement ￰22￱ that bitcoin is now viewed as an alternative asset class for retirement accounts, bitcoin ETFs will likely be utilized similarly to other asset classes in relation to the functions of a financial advisor, such as portfolio rebalancing, allocations, and cash ￰23￱ can potentially deteriorate the decentralized aspect of ￰24￱ Interestingly enough, bitcoin faced some selling pressure following recent news of Cleveland Federal Reserve President Beth Hammack not supporting an interest rate ￰25￱ may suggest that bitcoin exhibits a certain degree of correlation to the interest rate policy set by the Federal Reserve, making bitcoin more of an extension of the US Dollar as opposed to being an uncorrelated, independent ￰26￱ addition to this, bitcoin exhibits some correlation to the 10-year treasury rate, suggesting that the price of bitcoin may be more tied to US rates than one may have ￰27￱ In terms of the growth trajectory for bitcoin, Bernstein analysts expect bitcoin’s rally to continue into 2026 and potentially into 2027, expecting bitcoin to run up to $200,000/BTC.

Though this is an achievable price target for bitcoin, climbing to those levels appears to face some skepticism given that bitcoin tactically faces some chop at around $120k per ￰28￱ a tactical standpoint, bitcoin may be moving more into a bearish trend rather than one that would push the token to $200k/BTC. TradingView Risks Related to Bitcoin ETFs Bitcoin ETFs exhibit concentration risk as a single-asset investment ￰29￱ investing in BRRR or other bitcoin ETFs, the investor should use a weighted portfolio approach to ensure exposure is ￰30￱ federal government is weighing the use of BitBond issuances to cover payments of the national ￰31￱ the federal government moving into the cryptocurrency space, the decentralized appeal may be ￰32￱ is also becoming more heavily invested in by institutional investors as a component of an investment portfolio strategy; bitcoin may be subject to rebalancing, asset rotation, and cash ￰33￱ Thoughts Considering peer bitcoin spot ETFs, I believe BRRR may be a less optimal strategy for investment ￰34￱ the stronger trading depth and similar fee in IBIT, I believe other bitcoin strategies may be more appealing for investors.

I am recommending BRRR with a Hold rating.