What happened
The crypto industry had a bit of a jolt this morning when it was reported that Blackrock's Bitcoin (BTC +2.89%) ETF had gotten regulatory approval. However, those early reports were false, and Blackrock confirmed the exchange-traded fund (ETF) had not been approved.
Bitcoin miners were among the biggest movers on the market early in trading and have held onto some of their gains. Shares of Riot Platforms (RIOT +4.24%) jumped as much as 14.4% this morning, Hut 8 Mining (HUT +0.00%) was up 15.1%, and TeraWulf (WULF +0.73%) gained 16.7%. The stocks were up 3.2%, 9.3%, and 9.8% as of 2:30 p.m. ET on Monday.
Image source: Getty Images.
So what
Bitcoin hit nearly $30,000 after Cointelegraph reported that the ETF had been approved. The value quickly dropped after multiple sources confirmed with Blackrock that the ETF had not been approved.
Despite the false report, Bitcoin is still up 5.3% in the last 24 hours, so there are some gains that are driving Bitcoin mining stocks.
Miners are especially leveraged to the price of Bitcoin because they generate revenue from Bitcoin when it's mined and have also been holding it on their balance sheets. This makes them extremely highly leveraged to price movements.
There was positive news on the regulatory front when California Governor Newsom signed the Digital Financial Assets Law, which will create a regulatory framework for crypto in the state.
The other good news is that Bitcoin ETFs do appear to be on the horizon, and that could open more investors up to the crypto industry. If it causes a flood of investment to come into Bitcoin, the bounce in today's valuations may be justified.
NASDAQ: HUT
Key Data Points
Now what
Bitcoin ETFs seem to have been "coming soon" for a very long time now, and we still don't have them, at least for the spot price of Bitcoin. When Blackrock announced its application for a Bitcoin ETF, it was thought that this could be a pivotal moment because of how big and connected the company is. But we're still in a waiting game.
Speculation will continue, but for now, we're still in regulatory limbo. As a result, I don't think it's ultimately worth speculating on Bitcoin through miners because they are such a leveraged way to invest in the industry. If Bitcoin dropped, some of them would be in serious financial trouble.
I also question how much value Bitcoin will have in a world where the blockchain is starting to gain adoption in the financial industry. But Bitcoin isn't what's being transacted; it's stablecoins like the USDC token on low-cost, fast blockchains. The Bitcoin blockchain isn't stable, it's not fast, and it's not low-cost, so it may have an uphill battle when it comes to everyday adoption.
Bitcoin's best use may simply be "digital gold," and maybe that's enough to drive value for an ETF. But it's not the kind of productive asset I want to invest in, which is why I'm staying away from Bitcoin and the miners today.
