Cautionary Insights on Bitcoin ETF Approval

There is significant anticipation surrounding the introduction of a spot Bitcoin Exchange Traded Fund (ETF) product.

Furthermore, these anticipations are accompanied by projections that the new product, should it be approved, could potentially attract inflows of as much as $100 billion.

James Seyffart, a leading Bloomberg ETF analyst, has warned regarding these expectations, noting that a volume forecast of this magnitude might not be documented for years.

In direct response to the reaction of eminent mathematician Fred Krueger to the potential ramifications of a $100 billion inflow into Bitcoin, Seyffart issued the following warnings:

Krueger reminisced that a $10 billion influx in 2021 propelled Bitcoin to an all-time high (ATH), surpassing $69,000. Because the majority of the coin’s most prominent holders, including MicroStrategy, are resisting selling, acquiring two million BTC may be challenging.

Seyffart considers the $100 billion inflow into the market “extreme,” particularly in comparison to gold, which has been circulating for a considerable period.

Based on Seyffart’s analysis, gold exchange-traded funds (ETFs) in the United States have managed an estimated $95 billion in capital from 2004 to the present, notwithstanding their broad appeal to conservative investors.

Analysts hypothesized that Bitcoin reaching those above $100 billion in volume would unquestionably qualify as an outlier success story, even when evaluated over an extended period.

Applicants for Bitcoin spot ETFs are engaged in successful negotiations with the U.S. Securities and Exchange Commission (SEC), indicating that the regulator is exerting considerable effort to obtain approval.

The SEC faces a monumental decision day in early January regarding the Bitcoin ETF jointly issued by Ark Invest and 21Shares. It is anticipated that the SEC may simultaneously approve all spot Bitcoin ETFs to deprive any issuer of the first-mover advantage.

Having passed the subsequent approval window, the market is eager to observe the SEC’s handling of these expectations.