“Bitcoin Could Rise to $200,000, But It’s Missing the Point” – Expert Roundup

Passive funds in the US that mirror the price of Bitcoin could start 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 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 gain exposure to Bitcoin without opting for futures ETFs with higher fees or buying through digital . exchanges whose credibility and security have been undermined by a variety of collapses and crises.

Today we gather some experts on the matter, with opinions from:

Michael Walsh, CEO of Ireland at Zodia Markets, the FCA-registered institution-first trading venue and brokerage firm backed by Standard Chartered; Jason Hollands, Managing Director at Bestinvest, a London-based provider of execution-only investment services; Hector McNeil, Co-Founder and Co-CEO of HANetf, a European independent white-label ETF platform, and Ben Weiss, CEO of CoinFlip, the largest network of Bitcoin ATMs by volume in the US.

“BTC ETF Market Democratizes BTC Ownership”

Michael Walsh, Ireland CEO and Head of Distribution at Zodia Markets, said: “The SEC’s approval of BTC ETFs in the US is unequivocally 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 are the value of BTC .

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

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

UK likely won’t have a Bitcoin ETF anytime soon

Jason Hollands, Managing Director at DIY investment platform Bestinvest, has warned that Bitcoin enthusiasts among the UK’s estimated nine million self-directed investors may be waiting 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 become accessible to UK retail investors any time soon. The FCA has repeatedly raised 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 available directly through 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 of producing a Key Information Document, which a US-listed ETF will not have.

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

“This is due to 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 that regulated firms are focused on good client outcomes, and as a result, execution-only investment platforms have become more cautious about the access they offer to higher risk or more complex products, rather than to rely on. the caveat emptor (‘buyer beware’) principle that was generally accepted to have applied before.”

“Similar to the creation of gold ETCs in the early 2000s”

Hector McNeil, co-founder and co-CEO of HANetf, said: “The long-awaited approval of a spot price Bitcoin ETF by the US Securities and Exchange Commission is without a doubt one of the most important landmark moments since the birth of Bitcoin. As we saw in the run-up to the approval, investor excitement over the approval helped push Bitcoin out of its 2022-induced slump, with the coin’s price reaching $47,000 again.

“At the same time, digital asset ETPs available in Europe saw dramatic inflows in 2023. In total, the entire range of cryptocurrency ETCs from ETC Group saw $426 million in inflows over the course of the year. Among them, ETC Group Physical Bitcoin ( BTCE) saw an AUM increase of 351.12% and ETC Group Physical Ethereum (ZETH) 86.6% in 2023.

“The then-still-expected approval by the SEC helped boost the price of Bitcoin for several reasons. The first was the expectation that ETFs would unlock a new wave of investor demand. Many US investors were reluctant to invest in typical crypto- currency trading venues, given some of the high-profile scandals in the space. A Spot Price Bitcoin ETF gives a potentially large number of US investors a way to directly access Bitcoin now. The creation of Bitcoin ETCs in Europe, such as BTCE, has directed several billion dollars among European investors.A US Bitcoin ETF has the ability to raise even more investor money looking for spot price exposure to Bitcoin, considering the larger pool of money among both professional and retail investors in the US in comparison with Europe.

“We can consider the SEC approval in the same way as the creation of gold ETCs in the early 2000s, in which both myself and HANetf co-founder Nik Bienkowski had close involvement. If you read investment literature from before the creation of the first gold ETC, you will see that gold is often touted as an asset class to consider, adding diversification to a portfolio. But how to get exposure was always a problem. Investors can choose exposure to gold miners, but this comes with potential equity risk. Or, investors can opt for physical gold, which carries custody risk. Storing gold bars in your garage is not ideal. But, with the creation of the first gold ETC, investors finally had an easy way to invest directly in gold. It is similar for US investors with Bitcoin. Investors had the option of a futures-based ETF, approved in 2021 — but that added performance drags through rollover returns. Or they can use some of the online cryptocurrency trading venues to buy bitcoin directly, introducing a digital-based custody risk. But with the SEC approval, a spot price ETF became an option.

“But beyond simply unlocking new money for Bitcoin, SEC approval adds a new layer of acceptability to the currency. It’s interesting to consider that it was BlackRock’s filing for a Bitcoin ETF that fueled optimism around the prospect really picked up. This was because BlackRock is considered the most mainstream of mainstream asset managers. By applying for a Bitcoin ETF, it showed that cryptocurrencies themselves are increasingly being viewed as a mainstream asset class.

“Of course the problem remains for UK investors. For several years, investors in Europe have been able to invest in Bitcoin-minded ETCs such as BTCE, which are listed on various European stock exchanges. Now US investors can invest in Bitcoin through an ETF, following the SEC ruling. But the UK’s regulator continues to block British investor access.

“However, there are proxy ways to gain exposure to Bitcoin. For example, the ETC Group Digital Assets and Blockchain Equity UCITS ETF (KOIN) provides exposure to companies within the crypto and blockchain ecosystem, whose fortunes are intricately linked to the performance of Bitcoin itself. A key indicator of KOIN’s alignment with Bitcoin is its correlation. In December 2023, KOIN showed a correlation of around 0.7 with Bitcoin, highlighting its potential as a proxy for the digital gold. This means that as Bitcoin prices move, so do the fortunes of KOIN, providing investors with a strategic way to participate in the crypto market.

“Another option is the Grayscale Future of Finance UCITS ETF (GFOF), which aims to provide exposure to the companies that are building and can build the future of finance and digital payment systems. This includes everything from payment platforms, to exchanges, to miners, to asset management and blockchain technology.

“GFOF may be well placed to capture growth in the digital asset space, driven by the potential approval of a US Bitcoin ETF. As digital assets move increasingly into the mainstream, the infrastructure for transactions and asset management will need to expand.”

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

What does this mean for the crypto space?

This ETF approval did not fundamentally change what those in the space have 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 underpins 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 increasing the value of crypto?

Anticipation of a bitcoin ETF is throwing rocket fuel into the crypto market as 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 don’t want to hold bitcoin themselves or navigate a crypto exchange will now be able to have exposure to it, attracting a new surge of capital, liquidity and increased credibility and recognition.

What do you expect will happen in the coming days?

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

Following ETF approval, we are likely to see a surge in 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 approval.