How Do You Profit From Bitcoin ETFs? Investors Face Dilemma

Asset manager VanEck’s Bitcoin ETF is listed under the ticker ‘HODL,’ highlighting a dilemma facing buyers of the popular investment vehicles.

Hodl has long been the mantra of Bitcoin true believers during the market routs and rallies that have been a hallmark of the sector since the earliest days of the digital-asset world, when “hold” was misspelled by a frenzied advocate on an online forum in 2013.

But buying and holding has major drawbacks: It hinders the development of the blockchain for use cases besides speculation. Ethereum is actually the most commercially used blockchain. And for investors, it becomes a bit of a game of chicken where those who hang on the longest are at risk of being left holding the bag for those who exit the often volatile market.

“There is a collective action problem here,” said Hilary Allen, a professor at American University’s Washington College of Law. “All holders will theoretically be better off if no one sells, but then no one can actually realize any profit on their investment.”

About 70% of available Bitcoin hasn’t traded in more than a year, up from about 54% three years ago, according to data compiled by CCData. If the price can double in short order, it’s not going to be used to buy a pizza, to play games or for financial services.

Hold on to your #Bitcoin. #HODL

— Bitcoin (@Bitcoin) February 22, 2024