As anticipation builds for the introduction of spot Bitcoin exchange-traded funds (ETFs), prominent figures in the cryptocurrency space are sharing their perspectives on how this new investment vehicle could impact the broader financial markets.
Grayscale CEO Michael Sonnenshein recently conveyed his optimism about the BTC market’s resurgence during a CNBC interview.
He noted a growing trend of investors incorporating Bitcoin into their portfolios and expressed eagerness for the arrival of spot Bitcoin ETFs.
Sonnenshein highlighted the potential for these ETFs to offer exposure to Bitcoin for the U.S. advisory market, which currently manages approximately $30 trillion in wealth.
Grayscale is at the forefront of efforts to secure spot Bitcoin ETF approval, having engaged in discussions with the United States Securities and Exchange Commission (SEC) regarding the conversion of its flagship Bitcoin trust into an ETF.
Samson Mow, CEO of Jan3, believes that ETFs could play a pivotal role in bolstering the branding and marketing of Bitcoin.
He elaborated on this in a social media thread, emphasizing how competition among asset managers for increased assets under management (AUM) would fuel an advertising battle that could ultimately benefit Bitcoin.
Michael Saylor, co-founder of MicroStrategy, echoed the significance of Bitcoin ETFs, describing them as the most noteworthy development on Wall Street in three decades.
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Saylor anticipates that ETFs will serve as a catalyst driving demand for Bitcoin, making it more accessible to both mainstream retail and institutional investors.
While many foresee a surge in Bitcoin’s price upon ETF approvals, some temper their expectations.
Crypto investor Anthony Pompliano views the ETF as an “ultra bullish development” but doesn’t anticipate it to trigger substantial immediate market movements.
In contrast, Bitcoin advocate Oliver Velez draws a distinction between buying Bitcoin ETFs and acquiring “real Bitcoin.” Velez argues that purchasing a spot BTC ETF is akin to acquiring “paper Bitcoin” with annual associated costs, while owning actual BTC represents a one-time expense.
Velez suggests that dedicated Bitcoin enthusiasts will prefer to hold real BTC without incurring custody fees.
In summary, the impending arrival of spot Bitcoin ETFs has generated a flurry of opinions within the crypto community.
While some foresee significant benefits in terms of market exposure and branding, others remain cautious about the immediate impact on Bitcoin’s price.
The debate over the relative merits of ETFs versus owning physical Bitcoin continues to unfold as the cryptocurrency landscape evolves.
Bitcoin bull Michael Saylor believes that the potential approval of a spot Bitcoin exchange-traded fund (ETF) could mark the most significant development on Wall Street since the early 1990s.
In an interview with Bloomberg on December 19, Saylor expressed his enthusiasm for the prospect of a spot Bitcoin ETF, emphasizing its potential impact on the financial world.
Saylor stated, “It’s not unreasonable to suggest that this may be the biggest development on Wall Street in 30 years.
“The last thing that was this consequential was the creation of the S&P index and the ability to invest in all 500 S&P companies via one trade at the same time.”
According to Saylor, a spot Bitcoin ETF would serve as a gateway for both retail and institutional investors who have previously struggled to access a reliable channel for Bitcoin investments.
He anticipates that this ETF could trigger a significant surge in demand, followed by a “supply shock” in April when the Bitcoin halving event occurs.
“I don’t think we’ve ever seen a 2 to 10x increase in demand combined with a halving in supply in a scarce, desirable asset that people want to hold for a long period of time,” Saylor explained. As a result, he predicts that 2024 will witness a major bull run for the cryptocurrency market.
Saylor also confirmed that his company, MicroStrategy, would continue its Bitcoin investment strategy.
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He emphasized their commitment to finding ways to acquire more Bitcoin per share for shareholders, whether through debt, equity, or cash flows from the business.
MicroStrategy has been a pioneer in providing traditional investors with exposure to Bitcoin’s price since it began acquiring Bitcoin in 2020.
They offer leverage without charging fees, making it an attractive option for long-term Bitcoin investors.
At the time of publication, MicroStrategy owns 174,530 BTC with an average purchase price of $30,252, which is now valued at approximately $7.3 billion. This represents a $2.1 billion gain on their Bitcoin investment.
Saylor’s journey with Bitcoin has evolved significantly. A decade ago, he famously predicted the downfall of Bitcoin, a prediction that has not aged well.
However, his change of heart around 2020 led to MicroStrategy’s substantial Bitcoin investments, earning him recognition as one of the cryptocurrency’s most vocal proponents.
Bitcoin analyst Dylan LeClair praised Saylor for his ability to adapt, stating, “The measure of intelligence is the ability to change.”
In retrospect, Bitcoin’s price was just $677 on December 19, 2013, when Saylor made his initial prediction.
By the time MicroStrategy entered the market in August 2020, Bitcoin had surged to around $11,650, marking an 18-fold increase from his earlier prediction.
In conclusion, Michael Saylor’s endorsement of a potential spot Bitcoin ETF highlights the growing mainstream acceptance of cryptocurrencies and their significance in the financial world, showcasing the dynamic nature of the digital asset space.
In a recent development, a U.S. appeals court has successfully completed the legal proceedings required to officially seize 69,370 Bitcoins and various other cryptocurrencies linked to the now-defunct dark web marketplace, Silk Road.
In a court filing dated December 20th, the U.S. District Court of Appeals for the Ninth Circuit has affirmed the transfer of these seized Bitcoins into federal custody.
This decision builds upon a previous ruling that recognized the government’s rightful claim to the digital assets connected to Silk Road’s illegal activities.
Aside from Bitcoin, the confiscated cryptocurrency holdings also encompassed Bitcoin Gold (BTG), Bitcoin SV (BSV), and Bitcoin Cash (BCH).
This marks a significant development in the ongoing legal battle surrounding Silk Road’s ill-gotten digital wealth.
The legal saga began in earnest when the U.S. court issued its initial judgment on Silk Road’s Bitcoin holdings back in August.
This followed the U.S. Justice Department’s actions in 2020 when it seized the cryptocurrency and sought its official forfeiture.
At the time, the total value of the seized Bitcoin exceeded an astonishing $1 billion.
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The initial complaint filed in 2020 detailed how the U.S. government had gained control of the cryptocurrency, which was initially surrendered by an individual known as “Individual X.”
This individual had successfully hacked into Silk Road and taken control of its financial assets.
Previous reports from Cointelegraph have identified the Silk Road hacker as James Zhong, who is now 32 years old and was sentenced to a year in federal prison in April.
On July 12th, a cryptocurrency wallet linked to the United States Department of Justice (DOJ) carried out several transactions, moving approximately 9,825.25 Bitcoins valued at around $299 million, all tied to Silk Road.
The crypto community closely monitored these transactions, as speculations swirled about the potential impact of any substantial sale by the U.S. government on Bitcoin’s price.
Silk Road, established and operated by Ross Ulbricht from 2011 to 2013, was notorious for facilitating the sale of illegal drugs and weapons.
Following Ulbricht’s arrest in late 2013, the FBI shut down the platform.
In a surprising turn of events in 2022, Ulbricht agreed to use $3 billion worth of stolen Bitcoins to settle his debt to the U.S. government and also waived his claim to the 69,470 Bitcoins in question.
The approval of a Bitcoin exchange-traded fund (ETF) by January 10, 2024, is now almost certain, according to analysts at K33 Research.
In a report released on December 19, K33’s Head of Research, Anders Helseth, and Senior Analyst, Vetle Lunde, emphasized that recent developments surrounding ETFs, including filings by BlackRock and ARK Invest, adopting a cash-creation setup for their funds, have greatly increased the likelihood of approval in January.
The report also highlighted the robust performance of Bitcoin over the past week. Analysts observed that the trading volumes for spot Bitcoin had surged significantly compared to previous months.
This increase in volume was attributed to the strong rally of Bitcoin, which attracted new buyers and motivated profit-taking by sellers, resulting in price consolidation with elevated trading activity.
Despite the surge in spot Bitcoin trading, the report noted that open interest in BTC perpetual contracts had reached new yearly lows, indicating a lack of retail speculation.
In contrast, institutional investors on the Chicago Mercantile Exchange (CME) displayed an increasing appetite for Bitcoin-related risk, with CME open interest growing by 3,100 BTC in the past week.
However, analysts anticipated that this trend might change following the approval of spot ETFs.
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Once spot ETFs receive approval, the analysts predicted a “significant rotation” out of futures-based ETFs on the CME.
Additionally, active traders were likely to realize profits on their current long positions, collectively reducing the dominance of CME in the Bitcoin derivatives market.
The report also drew attention to the notable performance of certain altcoins, such as Solana Ordinals (ORDI) and Bonk (BONK), which experienced substantial gains in the last 20 days, rising by 22%, 114%, and 338%, respectively.
While such altcoin enthusiasm is often considered a sign of a market top, the analysts explained that this could be advantageous for Bitcoin.
The analysts suggested that the surge in altcoin enthusiasm helps release speculative pressure from Bitcoin, potentially reducing the risk of liquidation cascades.
Altcoins, in this context, serve as a positive pressure valve for those seeking excitement in the market while allowing for healthier leverage conditions in Bitcoin.
Consequently, Bitcoin may benefit from the diversification of speculative interest into altcoins.
Several prominent applicants seeking approval for a Bitcoin exchange-traded fund (ETF) in the United States are revising their applications to conform to the cash redemption model mandated by securities regulators.
Investment management giant BlackRock and ARK Invest, led by Cathie Wood, have both made updates to their S-1 registration statements for a proposed spot Bitcoin ETF, which have been submitted to the U.S. Securities and Exchange Commission (SEC).
These amendments, filed on December 18, primarily pertain to the creation and redemption process for proposed spot Bitcoin ETFs.
Both BlackRock and ARK have chosen to embrace the cash redemption system, as opposed to in-kind redemptions, which involve non-monetary assets like Bitcoin.
ARK’s registration statement hinted that its ARK 21Shares Bitcoin ETF would exclusively facilitate cash creations and redemptions.
The document did, however, mention the possibility of authorized participants being able to engage in in-kind transactions for creating and redeeming shares, pending regulatory approval.
Similarly, BlackRock filed a comparable update, emphasizing that in-kind transactions could occur, but only if approved by regulators.
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These transactions would still involve cash exchanges, but may also involve Bitcoin if approved by the Nasdaq Stock Market.
Eric Balchunas, an ETF analyst at Bloomberg, suggested that ARK and its ETF partner, 21Shares, initially sought alternatives to cash creations and had creative solutions for in-kind redemptions.
However, their shift to cash redemption indicates the SEC’s inflexibility on this matter, potentially indicating a resolution to the ongoing debate and a favorable outlook for approval in January.
The SEC’s insistence on a “cash-only” requirement implies that authorized participants will only be able to acquire additional ETF shares by providing the corresponding amount of cash, as noted by investor and consultant Vance Harwood.
Harwood further explained that the SEC’s stance is understandable, as it ensures transparency regarding the source of the ETF’s underlying Bitcoin holdings, which are expected to be purchased from reputable exchanges.
WisdomTree, a global ETF provider, also submitted an S-1 amendment for its spot Bitcoin ETF, the WisdomTree Bitcoin ETF, on December 18.
Notably, WisdomTree has opted to retain the option of in-kind creation and redemption.
In summary, several key players in the race for a U.S. Bitcoin ETF are adjusting their applications to comply with the SEC’s cash redemption model, indicating a potential resolution to regulatory hurdles and increasing the likelihood of approval in the near future.
The United States Securities and Exchange Commission (SEC) has announced a delay in its decision regarding several Ether exchange-traded funds (ETFs), with the new decision date set for May 2024.
This decision postponement was disclosed in regulatory filings made on December 18, 2023.
Two of the ETFs affected by this delay are the Hashdex Nasdaq Ethereum ETF and the Grayscale Ethereum Futures ETF.
The Hashdex Ether ETF has an objective to include both spot Ether and futures contracts in its portfolio.
On the other hand, the Grayscale Ethereum Futures ETF is strategically designed to act as a “trojan horse” that may lead the SEC to permit Grayscale to transform its Ethereum Trust into a spot Ethereum ETF.
In its filings, the SEC explained that it is initiating proceedings to gather additional public input regarding the potential listing of these ETFs.
Alongside these, the SEC has also postponed its decision on the VanEck spot Ethereum ETF and the spot Ethereum ETF proposed by ARK Invest, led by Cathie Wood, and 21Shares.
Bloomberg ETF analyst James Seyffart anticipated these delays, mentioning that they were expected to materialize before December 25.
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He further pointed out that the final decision deadline for the regulator is set for late May.
Notably, while the SEC has granted approval for Ethereum futures ETFs in the past, it has yet to approve a spot or mixed-type product related to Ether.
Concurrently, market attention is primarily focused on whether the SEC will give the green light to 13 spot Bitcoin ETFs prior to these Ether ETFs.
Analysts Seyffart and Eric Balchunas, also of Bloomberg, have estimated a 90% likelihood of approval for a spot Bitcoin ETF.
The prospect of institutional access to Bitcoin has instilled optimism in the market, and in the last six months, Bitcoin’s price has surged by over 44%.
Ether, while showing slightly less significant gains in the same period, has still experienced a notable 16.8% increase in its price, based on TradingView data.
The crypto market remains on edge, awaiting the SEC’s decisions on these ETFs and their potential implications for the broader cryptocurrency landscape.
On December 19, Bitcoin made a triumphant return, surging above the $43,000 mark, driven by fresh developments surrounding the prospective launch of the United States’ inaugural spot Bitcoin exchange-traded fund (ETF).
Data sourced from Cointelegraph Markets Pro and TradingView illustrated a remarkable recovery in Bitcoin’s price, propelling it to local highs of $43,456 following the daily close.
After an initially uncertain start to the week, BTC/USD rapidly gained momentum, with the December 18th candle closing more than 5% above the day’s lowest point.
Subsequently, news emerged that asset management giant BlackRock, a contender seeking approval for the first-ever U.S. spot Bitcoin ETF, had revised its redemption policy to include Bitcoin as an option.
According to the latest version of BlackRock’s S1 filing with the U.S. Securities and Exchange Commission (SEC), the redemption of a shareholder’s shares for the underlying Bitcoin generally would not trigger a taxable event.
The document also outlined new regulations regarding the exchange of baskets of shares for cash instead of Bitcoin, with the latter contingent upon regulatory approval.
The SEC is scheduled to commence its final deliberations on spot ETFs in early January 2024, making the upcoming month a critical juncture for Bitcoin enthusiasts.
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Multiple Bitcoin price predictions are contingent on the successful approval of the ETF, which is now perceived as highly probable after years of delays and rejections.
Bob Loukas, a trader and investor, expressed confidence in the approval process, remarking that “the level of SEC engagement and back-and-forth on the Bitcoin ETF tells us this is a 99.9% done deal.”
Meanwhile, the SEC delayed its final decision on several Ether ETFs until May.
In the interim, Bitcoin faces significant events, including the annual candle close and the release of various macroeconomic data, potentially contributing to holiday season volatility.
Traders are closely monitoring price levels, with the possibility of Bitcoin dipping below $40,000 still looming.
Crypto Ed, the founder of trading group CryptoTA, suggested this scenario might unfold before a final upward surge, potentially driving BTC/USD to $50,000 by the end of 2023.
Additionally, popular trader and analyst Matthew Hyland expressed optimism about further upside, citing a bullish divergence in Bitcoin’s relative strength index (RSI) versus its price on daily timeframes.
At the time of writing, the daily RSI stood at 60.45, having cooled off from the elevated levels when Bitcoin reached its recent 19-month high above $44,000.
The crypto community is eagerly anticipating the potential approval of a spot Bitcoin exchange-traded fund (ETF) in the United States, with some experts cautioning that this could have unintended consequences for cryptocurrency exchanges.
Industry insiders are forecasting that a spot BTC ETF could become tradable as early as 2024.
This development, coupled with Bitcoin’s upcoming block reward halving expected in April, has led Blockstream CEO Adam Back to believe that BTC’s price could surge to $100,000.
Additionally, proponents like Jan3 CEO Samson Mow suggest that the approval of a spot Bitcoin ETF in the U.S. could potentially propel Bitcoin to as high as $1 million within a matter of “days to weeks.”
However, the outlook for centralized cryptocurrency exchanges is not as rosy, according to ETF Store president Nate Geraci and Bloomberg ETF analyst Eric Balchunas.
Geraci recently expressed his concerns on X (formerly Twitter), stating that once approved, a spot Bitcoin ETF in the U.S. could lead to a “bloodbath” for cryptocurrency exchanges.
Geraci argues that retail investors trading spot Bitcoin ETFs will enjoy the benefits of institutional-level trade execution and lower commissions.
In contrast, users of crypto exchanges will continue to face higher trading costs and “retail trade execution,” which Geraci emphasizes must improve in order to remain competitive with a spot Bitcoin ETF.
Eric Balchunas underscores that a spot Bitcoin ETF is expected to carry a trading cost of just 0.01%, which aligns with the average fee for ETF trading.
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In comparison, exchanges like Coinbase currently charge fees that can go as high as 0.6%, depending on factors such as the cryptocurrency, transaction size, and trading pairs.
The introduction of a spot Bitcoin ETF is likely to intensify price competition within the crypto industry.
Balchunas believes that this will redirect funds away from exchanges that invest heavily in advertising, such as during events like the Super Bowl, to attract users.
Balchunas commented, “It would be the last ‘Crypto Super Bowl’ if they launch ETFs because ETFs are such a lean and cost-effective industry.
Some of these crypto exchanges have been capitalizing on their high fees, and this shift could change the landscape significantly.”
Historically, Coinbase has derived a substantial portion of its revenue from transaction fees. In 2022, the platform generated $2.4 billion in transaction fees, representing 77% of its total net revenue of $3.1 billion.
Nonetheless, Coinbase has been actively diversifying its revenue streams by offering additional income-generating services like subscriptions, aiming to reduce its reliance on fees.
Grayscale is currently assessing the potential tax implications linked to spot Bitcoin exchange-traded funds (ETFs) amid the circulation of inaccurate information regarding adverse tax consequences. In a series of posts shared on X (formerly Twitter),
Grayscale aimed to clarify the situation and ensure that retail investors involved with the Grayscale Bitcoin Trust (GBTC) are not expected to face tax-related issues when the fund sells Bitcoin to generate cash for fulfilling share redemptions.
The company is actively working towards obtaining the necessary regulatory approvals to migrate $GBTC to NYSE Arca, and as part of this process, they are considering the potential tax ramifications associated with spot Bitcoin ETFs that may need to sell their Bitcoin holdings to meet share redemption demands.
This discussion has come to the forefront due to the unique structure of GBTC, which is established as a grantor trust.
In a grantor trust, the entity that establishes the trust retains ownership of the assets, in this case, the underlying Bitcoin, for income and tax purposes.
Grayscale emphasized that cash redemptions of grantor trusts do not constitute taxable events for non-redeeming shareholders, such as retail investors.
This sets GBTC apart from mutual funds and many other ETFs, which operate differently for tax purposes. Grayscale’s position is that GBTC should be treated as a grantor trust.
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This development follows recent reports that the United States Securities and Exchange Commission (SEC) held discussions with Grayscale regarding its spot Bitcoin ETF application.
On December 8, it was reported that Grayscale and Franklin Templeton had met with the SEC to review their applications, closely following a meeting with representatives from Fidelity.
In addition, just a few days prior, on December 5, the SEC decided to postpone its decision on Grayscale’s spot Ether ETF application until January 24, 2024.
This delay underscores the ongoing regulatory scrutiny and evolving landscape surrounding cryptocurrency ETFs.
In conclusion, Grayscale is proactively addressing potential tax implications associated with spot Bitcoin ETFs to provide clarity and reassurance to its investors.
These considerations are taking place within the context of ongoing discussions and regulatory developments surrounding cryptocurrency ETFs in the United States.
Over the past two years, the value of Bitcoin (BTC) has been significantly influenced by the ongoing COVID-19 pandemic, escalating inflation rates, and regional conflicts.
However, according to Blockstream CEO Adam Back, 2024 holds the promise of a resurgence for the world’s leading cryptocurrency.
Back, the cryptographer responsible for pioneering the proof-of-work algorithm utilized in Bitcoin’s protocol, spoke to Cointelegraph about how Bitcoin is currently trailing below the historical price trend line observed during previous mining reward halving events.
These halving events are hardwired into Bitcoin’s code, occurring every 210,000 blocks, and result in a reduction of Bitcoin miners’ block rewards, from 6.25 BTC to 3.125 BTC in the upcoming halving.
Back explained that when analyzing the averages of past market cycles and halving events, it becomes evident that Bitcoin’s relative value is lagging behind widely accepted projections.
Several factors have contributed to this decline in BTC’s price, a trend also observed in traditional financial markets.
“The last few years were like biblical pestilence and plague.
There was COVID-19, quantitative easing, and wars affecting power prices. Inflation running up people, companies are going bankrupt,” Back pointed out.
These events have had a significant impact on financial markets and portfolio management. Investment managers have had to navigate risk and losses, leading to the sale of more liquid assets, including Bitcoin.
As 2023 draws to a close, many of these macro events have subsided, and industry-specific issues have been resolved.
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This positive development has been reflected in Bitcoin’s recent price surge starting in November 2023.
Back reiterated his previous prediction that Bitcoin would reach $100,000 in the next market cycle and emphasized that it might have already reached that milestone if not for the macroeconomic factors mentioned earlier.
He also referred to the “stock-to-flow” model created by PlanB, a pseudonymous former institutional investor.
This model suggests that wise Bitcoin investors historically bought BTC six months before a halving event and sold during significant price surges in the 18 months following the reward reduction.
Given Bitcoin’s recent price hitting $44,000 multiple times in December 2023, Back’s earlier prediction seems less far-fetched.
Additionally, prominent investors and market analysts have highlighted the potential approval of several spot Bitcoin exchange-traded fund (ETF) applications by the United States Securities and Exchange Commission (SEC).
These approvals, expected in early 2024, could lead to substantial institutional investment inflows into BTC-backed products.
Back believes that Bitcoin could reach $100,000 even before the ETF approval and the halving.
He stressed that the ETF’s influence should not be underestimated, particularly as it would allow traditional market segments and major fund managers like BlackRock and Fidelity to invest in Bitcoin indirectly, which they are unable to do directly due to their fund rules and regulations.
In conclusion, Adam Back’s outlook for Bitcoin in 2024 is optimistic, with the potential for significant price gains driven by various factors, including the upcoming halving and the anticipated approval of Bitcoin ETFs.