Bitcoin ETFs Boom: Potential Rise and Implications for the Crypto Market in 2024
Summary:
This article discusses the current surge in Bitcoin Exchange Traded Funds (ETFs) and the likeliness of Bitcoin's value increasing due to recent ETF approval by the Securities and Exchange Commission. It highlights the strategy and fee structure of different ETF providers and anticipates an influx of billions into Bitcoin in the short term. Despite potential regulatory and macroeconomic risks, the author remains optimistic, predicting a significant rise in Bitcoin's price in 2024.
With the frenzy surrounding the Bitcoin ETF, sensational price forecasts have been bandied about. Despite the Securities and Exchange Commission's (SEC) green light, there's speculation that a "sell the news" incident could cause Bitcoin to tumble by 30% from its present value. Nevertheless, I don't foresee this happening. On the contrary, I believe there's compelling evidence to suggest that Bitcoin could gain an additional 10% from its current standing over the $50,000 level before experiencing a minor dip in the short term. With years of experience in conventional asset management, I've learned that it's crucial to heed public statements by BlackRock, as the market usually does. BlackRock seemed confident of approval in the days leading up to January 10th.
Indeed, the applicants have unveiled essential aspects of their commodity offerings, primarily the fees they intend to impose for their ETFs. These fees, by ETF standards, are quite reasonable. BlackRock plans to charge a mere 0.20% for the first year or until the fund hits $5 billion in assets, after which the fee rises to 0.30%. Invesco is waiving its fee entirely for the first half-year or until it hits the $5 billion benchmark, before levying a 0.59% fee. ARK Invest and VanEck have fixed their charges at 0.25%, with ARK disregarding the fee for the first six months or until the fund reaches $1 billion. To give you a sense of scale, ProShares Bitcoin Strategy ETF, the most significant Bitcoin futures ETF, charges 0.95%.
This transparency suggests that the providers are prepared and keen on gathering assets. The stiff competition reminds us of the well-known fee wars between providers of broad-market index ETFs, especially the S&P 500 ETFs, which lasted throughout the early 2010s. With the current momentum and built-up anticipation, rejection seems unlikely.
Moreover, their ambitious targets for asset acquisition imply an expectation of billions flowing into Bitcoin in a relatively short period. The ETF providers have conducted their research and consulted various clients in recent months, meaning their predictions may be highly reliable. So, BlackRock, Invesco, and ARK alone could direct $11 billion into Bitcoin within a year if they reach their targets. It's entirely possible that we will see more funds being injected into Bitcoin using these investment channels. This shift marks the acknowledgment of Bitcoin as a valid, regulated investment asset comparable to gold, which has a market cap over ten times Bitcoin's size. Hence, we can anticipate billions pouring into ETFs, coupled with a surge in interest from more crypto-literate investors accessing Bitcoin via exchanges.
Given the positive impact of ETF approval, I don't foresee intense selling pressure that some predict. Current investment trends in Bitcoin reveal that a 30% sell-off is implausible. As of October, 76% of Bitcoin HODLers are long-term investors - a record-high. These investors are unlikely to sell now during a period they've long awaited. While short-term traders may exert some selling pressure, pullbacks are common in Bitcoin rallies and are often brief, preceding a recovery in prices. Therefore, we might see Bitcoin prices surge by 25-30% in 2024, from its current value of $46,000 to about $60,000.
Nevertheless, this doesn't mean there aren't potential risks to this rally. The approval of the ETF will increase regulatory scrutiny on the crypto landscape, possibly driving prices down. Global macroeconomic factors will also play a role, but whether their impact will be detrimental or beneficial remains uncertain. Overall, fears around Bitcoin don't hold much ground in 2024 - the year Bitcoin is set to enter the mainstream in a big way.
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Published At
1/10/2024 6:54:20 PM
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