Bloomberg Analyst’s Concerns About Bitcoin Spot ETF Inflow
There is growing optimism that the SEC will approve spot Bitcoin exchange-traded funds (ETFs) in the near future. Many speculate that if a Bitcoin ETF is given the green light, it could attract a staggering $100 billion in investments.
However, Bloomberg’s ETF analyst James Seyffart has expressed caution and warned traders not to get their hopes up. He believes that the projected inflow is an overestimation of demand and that it could take years to reach such high volumes.
Seyffart points out that it would be “extreme” to expect such a massive influx of capital, especially considering that gold has been on the market for much longer and only has a value of $95 billion in the US.
This warning from Seyffart comes in response to mathematician Fred Kruger’s post about a potential $100 billion inflow into Bitcoin. Kruger suggests that with this amount of investment, the price of Bitcoin could increase by 10 times. However, Seyffart argues that acquiring 2 million BTC, which would be necessary to match this demand, would be challenging as top holders are unwilling to sell.
Multiple ETF Applicants Meet With the SEC
A recent report reveals that several ETF applicants have recently held meetings with the SEC. Seyffart highlights that four distinct issuers, including Blackrock, Grayscale, Fidelity, and Franklin, have had discussions about their BTC filings in the past few days.
Blackrock has met with the regulatory watchdog for the third time in several weeks, while the other issuers had meetings last week. The Division of Trading and Markets and the Division of Corporate Finance were present at these meetings and will play a role in deciding whether the applications will be approved or denied.
The SEC is expected to make a decision on Blackrock’s application by January 15, 2024.
Hot Take: Approving a Bitcoin ETF Could Lead to Overestimated Inflows
While there is much anticipation surrounding the potential approval of a Bitcoin spot ETF, Bloomberg analyst James Seyffart cautions against overestimating the inflow of capital that may follow. Seyffart argues that projecting a $100 billion influx into the market is extreme and unrealistic. He compares this expectation to the current value of gold in the US, which sits at $95 billion despite being around since 2004.
Seyffart’s warning comes as mathematician Fred Kruger suggests that a $100 billion investment in Bitcoin could lead to a tenfold increase in its price. However, Seyffart counters that acquiring the necessary 2 million BTC would be challenging due to reluctant top holders. It remains to be seen whether the SEC will approve Bitcoin ETF applications from issuers like Blackrock, Grayscale, Fidelity, and Franklin, as they continue to meet with the regulatory watchdog.
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