Experts: Bitcoin may shoot towards $200,000 on ETF news but that misses the point

“Opinion is divided between those who believe that demand for inflows will drive the price to $200,000 within two years due to pent-up demand, and those who believe that all the good news is in the price and that inflows will disappoint and deflate the value of BTC.”

Passive funds in the US mirroring the price of Bitcoin could begin trading as soon as today after the US Securities and Exchange Commission (SEC) approved the first spot Bitcoin exchange-traded funds, with BlackRock, Fidelity, and Invesco among the global players that will offer ETFs to retail investors.

The widely anticipated move is expected to attract a new and wider constituency of investors both institutional and private to the digital currency, as they will now be able to get exposure to Bitcoin without having to opt for futures ETFs with higher fees or to buy through digital exchanges whose credibility and safety have been undermined by a variety of collapses and crises.

We today gather a few expert takes on the matter, with opinions from:

  • Michael Walsh, CEO of Ireland at Zodia Markets, the FCA-registered institution-first trading venue and brokerage backed by Standard Chartered;
  • Jason Hollands, Managing Director at Bestinvest, a London-based execution-only investment services provider; and
  • Ben Weiss, CEO of CoinFlip, the largest network of Bitcoin ATMs by volume in the US.

“$200,000 within two years due to pent-up demand”

Michael Walsh, CEO of Ireland and Head of Distribution of Zodia Markets, said: “The SEC’s approval for BTC ETFs in the U.S. is unambiguously good news for investors and asset managers. Opinion is divided between those who believe that demand for inflows will drive the price to $200,000 within two years due to pent-up demand, and those who believe that all the good news is in the price and that inflows will disappoint and deflate the value of BTC.

“However, that misses the point. A highly regulated BTC ETF market democratizes ownership of BTC; buyers of the ETF in any increment have the comfort of knowing that their assets are in the safe hands of household investment managers with simplified access and liquidity.

“Crucially buyers can proceed in confidence that they are greatly insulated from poor governance and, since an ETF reflects the value of the underlying asset, from hacks or other misappropriation of the physical BTC. It is entirely another question whether America’s Moms and Pops should be investing in BTC but there is a strong argument to be made that, at very least as a store of value, BTC has a place in every investment portfolio.”

UK unlikely to have a Bitcoin ETF soon

Jason Hollands, Managing Director at DIY investing platform Bestinvest, warned that Bitcoin enthusiasts among the UK’s estimated nine million self-directed investors might be in for a wait to have the same choice as their US counterparts.

“I am personally doubtful that the UK’s Financial Conduct Authority will authorize Bitcoin or other cryptocurrency ETFs to be made accessible to UK retail investors any time soon. The FCA has repeatedly flagged concerns about the extreme volatility of crypto-assets, the high risk of losses, and the difficulties retail investors face in valuing them.

“For an ETF to be made directly available by a UK regulated investment platform, under a regulation known as PRIIPs (Packaged Retail and Insurance-based Investment Products Regulation) ETF and other fund providers must comply with UK regulatory requirements in terms of producing a Key Information Document, which a US-listed ETF won’t have.

“Even were Bitcoin or cryptocurrency ETFs to become authorized in the UK in the near future, it is possible that these would be primarily accessible for professional investors such as discretionary fund managers or those certified as sophisticated investors.

“This is because of the introduction of the FCA’s Consumer Duty principle, which was a major regulatory development in the financial services sector last year. It aims to increase consumer protection for retail investors and ensure regulated firms are focused on good client outcomes, and as a result execution-only investing platforms have become more cautious about the access they provide to higher risk or more complex products, rather than relying on the caveat emptor (‘buyer beware’) principle which was widely assumed to have prevailed previously.”

Interview with Ben Weiss, CEO and Co-Founder of CoinFlip

What does this mean for the crypto space?

This ETF approval didn’t fundamentally change what those in the space have already known for years: bitcoin is here to stay.  Whether it’s cross border payments for those left behind by the traditional financial system, or bringing transparency to complex supply chains, crypto and the blockchain will continue to shape our world.  I’m glad more investors will now have access to this incredible asset and the technology that underlies it. This is the moment we’ve been waiting for, where cryptocurrencies cement their position as the driving force behind the future of finance.

Why is the ETF anticipation raising the value of crypto?

Anticipation of a bitcoin ETF is pouring rocket fuel into the crypto market because an ETF will attract a whole new wave of investors and is expected to further increase the price, accessibility and demand for bitcoin.  Investors who would not want to hold bitcoin themselves or navigate a crypto exchange will now be able to have exposure to it, attracting a fresh surge of capital, liquidity, and increased credibility and recognition.

What do you anticipate happening in the coming days?

An ETF approval opens the floodgates and empowers a new wave of investors, both seasoned and newcomers, to take the leap into digital assets. When there is heightened momentum, people want to move fast.

Following ETF approval, we will likely see a surge of liquidity, price increases, market expansion, and institutional involvement with high-profile leaders such as Goldman Sachs already potentially eyeing its role as an authorized participant for BlackRock and Grayscale pending an approval.