Bitcoin exchange-traded funds are “an inevitability” that will send the price of the cryptocurrency soaring, predicts the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.
The bullish assessment from deVere Group CEO – and long-time crypto advocate – Nigel Green comes as the US Court of Appeals sided with Grayscale in a lawsuit against the Securities and Exchange Commission (SEC), which had rejected the company’s application to convert the Grayscale Bitcoin Trust to an ETF.
Spot ETFs invest directly in underlying assets, typically stocks or bonds, at the current market price (spot price). They aim to replicate the performance of a specific index or asset class by holding a portfolio of the actual securities that make up the index.
Mr Green says: “This is a landmark legal win for crypto against the US regulator.
“The court’s decision destroys the SEC’s central argument for rejecting every spot Bitcoin ETF over the last few years.
“This win paves the way for Bitcoin ETFs.
“Following the monumental ruling, there’s very little chance now the SEC will block the launch of ETFs.
“A swathe of big-name asset managers, among others, have filed ETF applications for Bitcoin ETFs, and we expect that the SEC will organise a block approval of applications that meet requirements, as it will not want to be seen as a kingmaker.
“We believe that Bitcoin ETFs are now an inevitability. And they could come to market sooner than many anticipate.”
The deVere chief executive believes that the price of crypto will jump if/when Bitcoin ETFs are launched for three reasons.
“First, if Bitcoin ETFs are approved, it would open up the cryptocurrency market to a broader range of investors who might have been hesitant to directly invest in digital assets. This influx of new capital from institutional and retail investors could drive up demand for Bitcoin, leading to an increase in its price.
“Second, ETFs typically involve the purchase of the underlying asset by the fund managers. If Bitcoin ETFs follow this structure, it could create a substantial demand for actual Bitcoins to back the ETF shares. This increased demand, coupled with the limited supply of Bitcoin (capped at 21 million coins), could lead to a supply-demand imbalance, resulting in a price surge.
“And third, the launch of Bitcoin ETFs might improve the overall perception of cryptocurrencies in the eyes of regulators and traditional financial institutions. This increased legitimacy could attract more conservative investors who were previously wary of the regulatory uncertainties surrounding cryptocurrencies. As more institutional money flows into the market through ETFs, the price of Bitcoin would experience upward pressure.”
deVere expects that the first Bitcoin ETFs will be available in Quarter 1 of 2024 “if not before.”
Nigel Green concludes: “In-the-know investors are unlikely to wait until the potential launch of the ETFs to increase their holdings of Bitcoin.”