Bitcoin ETF Narrative Shapes BTC Bullish Rally in Many Ways, Asset Management Vet Says – Crypto News – Crypto News
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Bitcoin ETF Narrative Shapes BTC Bullish Rally in Many Ways, Asset Management Vet Says Bitcoin ETF Narrative Shapes BTC Bullish Rally in Many Ways, Asset Management Vet Says

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Bitcoin ETF Narrative Shapes BTC Bullish Rally in Many Ways, Asset Management Vet Says – Crypto News

Published

3 years ago

on

Vladislav Sopov

Ilan Solot, co-head of digital assets at Marex Solutions, explains the effects spot Bitcoin ETF approval might have for retail and institutions

Contents

Ilan Solot demonstrates three parts of the Bitcoin ETF narrative and tracks how this saga might affect the progress of the ongoing cryptocurrency rally. After major ETF announcements, crypto might finally be losing its “toxic asset” label that still looks dangerous to 90% of potential investors.

BlackRock, WisdomTree Bitcoin ETF ambitions to rebuild legitimacy of Bitcoin (BTC) as a class

According to the analysis by Solot, the Bitcoin ETF narrative and its effects on the cryptocurrency market’s performance should be better understood as a combination of three elements: frontrunning, actual liquidity flow (“when/if the product launches”) and rebuilding the legitimacy of the entire asset class.

The last part of the narrative gained steam after the announcements of BlackRock and WisdomTree filing for spot Bitcoin ETF approval with the US regulator SEC.

To prove this theory, Solot recalled that the previous two micro-rallies of Bitcoin (BTC) failed to result in significant capital inflow into publicly-traded crypto-based investing vehicles. CoinShares’ Weekly Flow tracker registered pale activity of investors despite the BTC price performing well.

Thus, both rallies of Q1, 2023, were either fueled by captive capital churning inside the system or narratives that emerged within the cryptocurrency segment itself: second-layer protocols, ZK-tech solutions, liquid Ethereum (ETH) staking products and so on.

Also, liquidity was pushed to the cryptocurrency segment by the interest of investors in hedging against the banking sector instability and rising inflation in various regions across the globe. At the same time, Solot admits, according to research by a $5 trillion asset manager Nomura, only 3.5% of investors are willing to store more than 10% of their portfolios in crypto and offer their clients to do so.

What does Bitcoin ETF mean for retail? three pillars

Should it be approved, the spot Bitcoin ETF launch might totally change the game. First, it will erase the negative effects associated with self-custody risks of owning “physical” crypto.

Then, investing in Bitcoin ETF will be way more convenient for the vast majority of investors. Technically, they will be injecting liquidity into yet another ETF just like they used to.

Also, working with spot Bitcoin ETF is more optimal for tax reasons, in particular in the United States.

As covered by U.Today previously, yesterday, on June 30, 2023, the US SEC dismissed the ETF filings by US asset managers as “inadequate”; Bitcoin (BTC) dropped by 4.12% in minutes following this statement.

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