2 reasons Bitcoin ETF approval drives further upside in Bitcoin and crypto prices.

Is new Bitcoin equilibrium price >$168,000?

It looks like the first Bitcoin ETF will finally be approved for trading in the US.  This product, offered by ProShares, will use CME futures instead of acquiring and holding actual bitcoin.  This is an important distinction, but from the perspective of the impact on the price of spot bitcoin, we do not think this will have a big effect.

There are some views that the run up in Bitcoin prices $BTC is already discounting this approval.  To an extent, this is probably true, since Bitcoin has surged to near all-time highs in the past few weeks. But in our view, the price of Bitcoin will continue to rise, well after actual approval of the ETF.  There are two reasons for this:

Reason #1

  • The 10 largest ETFs saw first year inflows of $14 billion
  • The most successful launch was QQQ (Nasdaq 100 ETF) launched in 2002
  • First year inflows to QQQ were $36 billion
  • We think Bitcoin demand will exceed the inflows for QQQ
  • Bitcoin $BITO could see first year inflows exceeding $50 billion

Reason #2

  • Crypto is about 1% of allocated liquid assets
  • The ETF $BITO will enable vastly more individuals to allocate to crypto
  • This will drive significant new inflows
  • By contrast, QQQ was already available via individuals buying stocks
...
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