Sorry, no Bitcoin ETF
Bitcoin and cryptocurrency exchange-traded funds (ETFs) have been on the wishlist of crypto market participants for years now, especially among the retail and professional managers in the US.
Such products are regulated, custodied crypto offerings that would allow traders and investors to bet on the growth (or fall) of cryptocurrencies using a well-regulated, legal, and reputed platform which minimizes counterparty risk (the scenario of an exchange failing to pay out or acknowledging ones trade position).
Investors have waited long for such a fund to make an appearance in the US, and they may have to wait even more if one fund manager is to be believed.
Cathie Wood, the CEO of the crypto-focussed division of Ark Investment, said in a recent appearance at the ETH Trends Big Ideas event that the crypto market had a long way to go before it could be considered formidable in the US markets.
As per Wood, the entire crypto market cap needs to reach at least $2 trillion for Bitcoin or crypto ETFs to be considered/passed by US regulators. This is a near 200% increase than the $700 billion market cap that Bitcoin managed to reach earlier this month, its highest-ever.
She said, The flood of demand has to be satisfied so its going to have to get well over a trillion dollars – $2 trillion, I think, before the [U.S Securities and Exchange Commission] will feel comfortable about a Bitcoin ETF.
Several US firms have tried to launch their regulated Bitcoin ETFs in the country but have, so far, only met with rejection. At least three such ETFs were rejected in a single day in 2018, while one hopeful even pulled out of the ETF race altogether in 2019 (it said it would try when the laws were more favorable).
Biden is good for crypto
In the rest of his presentation, Wood added that Gary Gensler, the frontrunner to lead the US Securities and Exchange Commission under the Biden administration, held a favorable view of the crypto market and was likely to introduce supportive policies to invigorate their usage.
She called Gensler “pro-Bitcoin” in the meeting, in addition to mentioning the incoming SEC leaders were relatively more crypto-friendly than the previous Trump administration.
Meanwhile, her presentation also contained some price predictions for Bitcoins prices, especially as hedge funds, tech firms, and family offices make their way into the burgeoning crypto market.
Wood said that if every S&P 500 company were to invest 1% of their treasury assets into Bitcoin, the asset‘s price would increase by $40,000. And for even more hopium, she said that if this allocation reached 2.5% and 6.5%, it could impact bitcoin’s price “by $200,000 to $500,000.”