Ben Laidler, global markets strategist at the eToro trading and investment platform. The expert analyzes the expectations that the market has placed on the approval of the Bitcoin spot ETF.
“Investor expectations are justifiably high, judging by the dramatic narrowing of Grayscale Bitcoin Trust's (GBTC) discount to net asset value and the escalation of SEC engagement to date,” he explains.
ETF, IN THE SPOTLIGHT:
The long-awaited SEC decision on a spot Bitcoin exchange-traded fund (ETF) is imminent. Investor expectations are justifiably high, judging by the dramatic narrowing of Grayscale Bitcoin Trust's (GBTC) discount to net asset value (see chart), and following the SEC's intensified engagement to date .
This suggests that a disappointing result could be negative, and some might even be tempted to "sell the news" in the event of a positive result. But this overlooks the long list of upcoming catalysts for crypto assets, from the Bitcoin halving to regulatory changes. Any of them are significant for such a small ($1.6 trillion), young (16 years old), and retail-dominated asset class.
EXPECTATIONS:
Crypto assets were by far the best-performing asset class of 2023. Partly because of hopes that the SEC would approve applications for cash ETFs, from Blackrock to Fidelity. In this way, Bitcoin ETFs would join the $7.5 trillion of assets currently held in more than 3,000 ETFs in the US alone, and boost investor access to this asset class. Bitcoin surpassed Ethereum in forecasting, bringing its “dominance” of the asset class to 50%. The Grayscale Bitcoin Trust (GBTC) reflects a high degree of trust. It owns 3% of Bitcoin in circulation and plans to convert to an ETF following a positive decision by the SEC. The discount of its share price to its net asset value has already narrowed sharply.
PERSPECTIVES:
Regardless of this SEC decision, we are constructive. Spot ETFs are likely to arrive sooner rather than later, given the progress made so far.
Ethereum spot ETFs are lagging BTC, supporting its recovery, while other catalysts loom, from the Bitcoin halving in April to the Federal Reserve's interest rate cuts in mid-year, year-end accounting and regulatory changes that make it easier for U.S. companies and global banks to hold cryptoassets, and a central bank's possible decision to hold onto Bitcoin.
Any of them would be significant in the context of this asset class. This outweighs upcoming settlements of up to $10 billion from Mt. Gox and FTX creditors in 2024.
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Source: Territorioblockchain.com
