There is no doubt that the approval of all eleven exchange traded funds applied for was a historic event. The SEC is thus opening the door for institutional investors to participate in the price of humanity’s best-performing asset. Pension funds, sovereign wealth funds, insurance companies: everyone can get in. Since this type of investor has assets worth billions, the expectations of the ETF were pushed beyond measure. Memes like the “God Candle” circulated on platforms like
In reality, the opposite happened: the Bitcoin ETF was, as we already anticipated, a sell-the-news event. BTC scratched at $49,000 as a result of the approval. However, at the time of writing, digital gold is trading at $42,484. Why is that?
The approval of BTC index funds was a lesson in market psychology. In short: the approval was so secured that it was simply priced in. Market observers such as Bloomberg analyst Eric Balchunas estimated the probability of approval at 90 percent. In anticipation of this, investors drove up the price in advance.
The next few weeks: Now it depends
How the BTC ETF actually affects the price development depends on the stamina of the institutional investors. The current hype will only have a limited impact. It will probably take a few weeks or even months before really large sums can flow. Funds must be approved by committees. Investors must show a real interest in BTC.
But if you follow the analogy of the gold ETF, the ETF pushes the underlying asset into completely new spheres.
The price of gold doubled within four years and tripled within ten years.
How far this comparison will hold and whether Bitcoin will actually be worth a million US dollars one day remains to be seen.
You can find out what BTC investors should know about the Bitcoin ETF and what the cryptocurrency is doing in general in the new BTC-ECHO Bitcoin Report.
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