With the rise in applications for spot Bitcoin ETFs, Wall Street is getting ready to directly engage with Bitcoin. Traditional financial institutions will likely promote it as a safe investment, but ETFs offer a different way to invest in Bitcoin compared to traditional crypto exchanges. Spot Bitcoin ETFs do not offer a decentralized and censorship-resistant asset.
Wall Street cannot market these aspects of Bitcoin because they cannot provide them. However, Bitcoin technology and custody companies can use Wall Street’s marketing campaign to highlight their comparative advantage and gain market share. These Bitcoin companies should plan for such marketing, understand the difference between the ETF narrative and reality, and take advantage of it.
In the 1980s, former CEO John Mack famously exclaimed, “There’s blood in the water. Let’s go kill!” on Morgan Stanley’s trading floor. While Wall Street’s culture has changed, its objective remains the same: make money selling financial products. A spot Bitcoin ETF is no different.
Selling Bitcoin products is a challenge for these incumbents because it threatens their role as financial intermediaries. They must create products that capture Bitcoin’s appeal while hiding its core principles. It’s like offering a watered-down version of Bitcoin that is easy for investors, regulated for authorities, and profitable for issuers. This narrative turns Bitcoin from a revolutionary tool into just another financial option.
Wall Street marketing teams are already crafting narratives to promote the purchase of spot Bitcoin ETF shares, drawing inspiration from successful gold ETF promotions starting in 2004. They will portray self-custody as risky and inconvenient, similar to holding physical gold oneself.
This narrative will emphasize the complexity and unfamiliarity of managing private keys with Bitcoin hardware wallets and seed phrases. They will highlight the millions of bitcoins that are permanently lost due to the destruction or loss of private keys, taking cues from the scandal-ridden Celsius cryptocurrency exchange.
Bitcoin companies must counter this by explaining that self-custody can be secure and easy. They can promote innovative “collaborative custody” apps that securely distribute private keys among household members, allowing each person to recover funds without the ability to move them without others’ permission.
Another tactic will be to highlight the insolvencies and fraudulent practices of crypto exchanges like FTX, Celsius, Voyager, and BlockFi. Wall Street executives will use terms like “under-regulated” to contrast their firms with crypto exchanges.
Wall Street invests significant time and money in compliance, making incumbent financial firms appear safer than recently fallen crypto platforms in the eyes of consumers. Bitcoin companies must explain that there are alternative sources to obtain Bitcoin, such as bitcoin-only brokerages and peer-to-peer transactions. They must also present self-custody as a “third way” with manageable risks and significant advantages.
Despite previous criticisms, BlackRock CEO Larry Fink now sees money moving into Bitcoin as a “flight to quality.” This phrase is part of an explicit marketing narrative promoted by the company. The new narrative recognizes Bitcoin’s potential for storing value during volatile market conditions. Asset managers primarily make money on flows, so if the marketing narrative of a “flight to safety” dominates, firms like BlackRock can encourage people to move in and out of Bitcoin as the fear and greed index fluctuates.
As Wall Street promotes Bitcoin as a risk-off asset, Bitcoin companies can benefit. While asset managers spend marketing dollars on this narrative, Bitcoin firms can use what works and educate customers about the true value of owning physical Bitcoin.
Regulators are setting the stage for a national security narrative, and Wall Street is likely to follow suit. Bitcoin companies must be prepared to explain that the right to use Bitcoin comes from natural law, freedom of speech, privacy, and property rights. Thought-leaders can win the public’s support, but they must anticipate challenges from Wall Street’s marketing engine, user-friendly financial products, and regulatory pressure.
The marketing narratives promoting spot Bitcoin ETFs will obscure the groundbreaking innovation of Bitcoin as a traditional financial product. Despite Wall Street’s half-truths or misleading narratives, their marketing efforts will generate interest. Bitcoin companies have the opportunity to capture the public’s attention and offer a complementary narrative about Bitcoin as a decentralized and censorship-resistant bearer asset.
