Leading analysts unanimously claim that the cryptocurrency market greatly underestimates the full potential of spot Bitcoin ETFs
The cryptocurrency industry has a way of constantly surprising both investors and market participants. However, one cannot help but notice a noticeable discrepancy between current valuations and the future promises of such a financial instrument as Bitcoin spot ETFs.
The Market Is Wrong About Bitcoin ETFs
Analyst firm K33 Research recently noted a significant discrepancy between market sentiment and the increased prospects for approval of spot Bitcoin ETFs.
Senior Analyst Vetle Lunde with Vice President Anders Helseth emphasizedthat despite the market downturn, many do not realize the magnitude of this historic event. They believe that in the long term the scales will tip in favor of the bulls.
“The market is greatly underestimating the impact of US BTC-ETFs and ETH futures ETFs. There are few catalysts expected in September, providing a good opportunity for strategic positioning ahead of October, which is filled with market-moving events. My preference is to combine building a stake in ETH and being long BTC with conservative leverage.”
Deadlines for Bitcoin and Ethereum ETFs. Source: K33 Research
Let us recall that Grayscale’s successful battle with the US Securities and Exchange Commission (SEC) recently resulted in a court decision in which the regulator’s rationale for rejecting applications to create a spot Bitcoin ETF was harshly criticized as “arbitrary and capricious.”
Lunde and Helseth believe that the approval of a spot Bitcoin ETF will lead to enormous financial inflows into BTC, which will significantly increase buying pressure.
“The last three months have significantly improved the chances of ETF approval, but prices do not reflect this… We firmly believe the market is wrong. By all indications, this is a buyer’s market and it would be foolhardy not to accumulate BTC at current levels,” Lunde and Helseth added.
Time to start building a crypto portfolio
Ilya Volkov, CEO of YouHodler and former board member of Libertex Group, told BeInCrypto that he also believes that “now is a great time to enter the market.” He emphasized that investors have yet to fully appreciate Grayscale’s victory over the SEC, which suggests a bullish long-term outlook.
“Now I advise you to enter the market and start building a portfolio. We are still in the early stages of growth when comparing cryptocurrencies to the early days of the stock market. We already know how profitable it was to be in the stock market in its early stages, so if you’re already involved in the market, then you’re good. Continue. Try day trading or a DCA (dollar cost average) strategy to build your portfolio.”
To recap, the DCA strategy is a popular strategy in which an investor buys a specific asset at a predetermined interval, regardless of price changes, investing the same fixed dollar amount into the asset.
This distribution of purchases helps to abstract from the emotional factor and the influence of volatility on investment decisions. At the same time, the investor gets rid of the need to monitor every market fluctuation or predict where it will go next.
However, Volkov emphasized the need for patience in this field. He noted that regulatory problems could overshadow the forecasts of Bloomberg analysts, who considerthat the probability of approval of a spot BTC-ETF is 75%.
“We need to be patient. First, the US must approve a Bitcoin ETF. The market should not overwhelm the SEC with all these filings. Give them the opportunity to adapt slowly. Government always moves slower than technological innovation, so we should try to focus on one thing at a time,” says Volkov.
Likewise, former SEC Commissioner Jay Clayton recently emphasized that growing clarity about the nature of Bitcoin suggests it is only a matter of time before a spot Bitcoin ETF is approved.
“It is clear that Bitcoin is not a security. Bitcoin is something that retail and institutional investors want access to, and also, very importantly, some of our most trusted fiduciaries who want to bring this product to the retail public. So I think that […] approval inevitable».
Can Ethereum be recognized as a security?
The story surrounding cryptocurrencies is not limited to Bitcoin. Gautam Chhugani, managing director of Bernstein, is confident that the possibilities of cryptocurrency ETFs will not be limited to just bitcoin, but will extend to many crypto assets. Accordingly, he expects an industry push to create spot ETFs on Ether, since “ETH also has a similar market structure: the CME traded futures market and the spot market.”
In the coming months, Ethereum may well eclipse Bitcoin. Analysts believe Ethereum will take advantage of the momentum generated by the expected entry into the ETF futures market.
To put it in perspective, Bitcoin rose 60% in the weeks leading up to the launch of the futures ETF on October 19, 2021. ETH’s trajectory could potentially follow this path.
At the same time, Volkov believes that even if the SEC classifies ETH as a security, this should not be an obstacle to launching an ETF on Ethereum.
Read also opinion: Why Ethereum has not yet been recognized as a security
“Some might argue that the SEC will not approve an Ether ETF due to the strong disparity between BTC and ETH. BTC is a pure cryptocurrency, while ETH is a technology with many interconnected aspects. Additionally, ETH can be considered a security. However, in my opinion, the SEC will ultimately have no choice but to approve it. Let’s consider this as the law of the excluded middle. If the SEC approved a BTC ETF, then it should do the same for ETH. If it considers ETH a security, then the SEC must approve an ETF for it. Simply because ETFs are inherently designed for securities,” comments Volkov.
While the market awaits clarification of the regulatory situation, Volkov emphasized that the global adoption of cryptocurrencies certainly depends on the maturity of the market. Like all markets, cryptocurrency goes through a certain evolution, starting with minimal or no regulation and strong volatility.
However, according to Volkov, markets often face significant disruptions that require regulatory intervention. Such intervention provides stability, which creates sustainable trends in the market. Therefore, the comprehensive regulatory framework being developed indicates that the authorities are taking this technology seriously.
“Regulators are still trying to figure out the terminology to define cryptocurrencies. But once they do, it will be a big step forward. The turbulence we are currently experiencing will end at some point. I don’t see any turning point that could change this forecast. This will be a slow, consistent trend of long-term implementation and adoption,” says Volkov.
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2023-09-17 13:38:00
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