It’s ETF October, and the news continues to roll in. Grayscale, the proprietors of GBTC, the most popular traditional investment vehicle for Bitcoin in the US has filed to convert their Bitcoin fund into a spot ETF. Grayscale has the largest Bitcoin fund in the United States, with nearly 39 billion in assets under management.
However, it won’t hit the market for at least 75 days, as that is the review period required. With all the ETF filings and news swirling around, it is important to note that only futures based ETF’s have been approved by the SEC so far. As we reported Friday afternoon, Proshares filing for a futures ETF has been approved by the SEC, with trading set to being Monday.
Grayscale intends to be the first spot traded ETF in the United States, which means that settled Bitcoin will be held in custody, and those who buy the ETF would be able to actually redeem Bitcoin, unlike Futures based ETF’s. This is important because spot traded ETF’s have the potential to cause a massive supply shock, and send BTC soaring.
The principle advantage of a spot ETF would be that the shares you hold would represent the actual holdings, and you would not risk that your shares trade at a discount as they do now, with GBTC. The premium/discount (with GBTC) exists because shares are currently non-redeemable. With a spot ETF, the shares you buy should always represent the actual value. When demand rises, the ETF fund buys Bitcoin, for example.
Many Bitcoiners scoff at Futures ETF’s, because they are linked to derivatives contracts rather than actual Bitcoin holdings. With this filing, Grayscale seeks to leverage the SEC’s approval of Futures ETF’s, because if they approve that, then clearly the SEC has no reason to not approve a spot ETF, in theory. A spot ETF would forever legitimize Bitcoin, and could set a permanent “floor price” of Bitcoin it did with Gold when the first spot traded Gold ETF was approved in 2004.
As you can see below, since the first ever Gold ETF was approved in 2004, the price has never fallen below what it was at the time of approval. Now Gold is less volatile, but as Bitcoin matures, a spot ETF may truly give Bitcoin a ‘permanent’ support level, at least, that is what many speculate. Some surmise, when comparing it to the Gold chart, that Bitcoin could go to $300k. The CEO of Cryptoquant, Ki Young Ju stated based off this analysis, that “We may never see this $BTC price again once [spot] ETF’s approved.”
NYSE listed the first gold ETF in Nov 2004, and the price never came back.
Many economic factors have affected the gold price, but listing ETF would have played a major role in the inflow of global institutional funds.
— Ki Young Ju 주기영 (@ki_young_ju) May 9, 2021
Either way, a spot ETF will clearly be a game-changer for Bitcoin, and after one is approved, Bitcoin might never look back to anything below $40k. The SEC has no reason to not approve a spot ETF, because if they are concerned about volatility, a spot ETF will actually decrease volatility, and with further regulatory clarity, as Michael Saylor predicts, Bitcoin will be less volatile, which means, this bull run is critical, and dare I say, a golden opportunity. It’s easy to realize you must think about ‘filling your bag accordingly.’
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