Analyst Warns Against Extreme Expectations Ahead Of Bitcoin Spot ETF Approvals

Top Bloomberg’s ETF analyst James Seyffart has voiced his concern amid ongoing speculation regarding a massive capital inflow if a Spot Bitcoin Exchange-traded fund (ETF) is approved.

Bloomberg Analyst On Bitcoin Spot ETF Inflow

There is increasing optimism that the United States Securities and Exchange Commission (SEC) will soon allow spot Bitcoin exchange-traded funds (ETFs). Along with the anticipation, is the projection that if a Bitcoin ETF is approved, it might see an inflow of up to a whopping $100 billion.

Due to this, James Seyffart has publicly warned traders against holding these kinds of expectations. According to the analyst, he believes that the projection is an overestimation of demand. He then highlighted that it might take years to record a massive volume of this kind.

Seyffart asserted that it is “extreme” to predict such inflow into the market, particularly in light of the fact that Gold has been on the market for a while. He further pointed out that despite gold being around in the US since 2004, the asset’s value in the country is sitting at $95 billion. 

The Bloomberg analyst’s warning came in response to the top mathematician Fred Kruger’s X (formerly Twitter) post about a potential $100 billion inflow into Bitcoin. In the X post, Krueger recounted how Bitcoin reached its all-time high (ATH) of over $69,000 in 2021, thanks to a $10 billion inflow.

Furthermore, he asserted that with BTC getting a $100 billion inflow, the price of the crypto asset might increase by 10 times. He then made a rough calculation that if BTC is at $50,000, the $100 billion inflow with that price will amass to 2 million BTC.

Nonetheless, he noted that this is a small supply, therefore the price has to increase to match the digital asset’s demand. He further pointed out that getting these 2 million BTC will be difficult as top holders of the asset are unwilling to sell theirs.

Multiple ETF Applicants Meet With The SEC

A recent report reveals that several ETF applicants have had meetings with the US regulator lately. Bloomberg’s ETF analyst James Seyffart has highlighted that about 4 distinct issuers have met with the SEC about their BTC filing in the past few days.

According to the analyst, Blackrock met with the regulatory watchdog for the third time in several weeks. Meanwhile, other issuers such as Grayscale, Fidelity, and Franklin each met with the SEC last week.

Furthermore, Seyffart highlighted that both the Division of Trading and Markets and the Division of Corporate Finance attended each of these meetings. He also added that these two divisions will be responsible for deciding if and when the 19b-4’s & S-1’s would be approved or denied.

However, by January 15, 2024, the US regulator is expected to decide on Blackrock’s application.

Featured image from iStock, chart by Tradingview.com