There's a lot of hype and talk about black rock and a number of other major players with up to 60 trillion dollars in managed money assets launching their own Spot ETF.
In this article we area going to explore what a ETF is and a Spot ETF and the possible outcomes of it all for the rest of this year.
What Is A ETF?
A ETF is just a pool of money that gets invested into something specific. In the case of the BTC ETF it means all of that pool of money would flow into Bitcoin. While at first you may think that means only bitcoin goes up you have to remember there is half a trillion dollars sitting on Bitcoin right now that can be instantly liquid and more being mined each day.
That means that bitcoins price would spike from the injection of money but that money could that be easily moved into other assets and cryptos simply because the value of bitcoin has gone up. You see the ETF still has to buy and hold bitcoin.
But there's already Bitcoin ETF right?
Yes!
So what does it matter if another comes on board?
Blackrock holds a vast wealth of finances. In fact they are said to pretty much control the world. They currently manage 10 trillion dollars in assets or 1/6th of the current national debt of the united states.
The current existing ETFs also require you to be an accredited investor.
Why Don't people just invest in bitcoin themselves?
When you have loads of money the reason you have it is because you take the highest upside possible while exposing yourself to little or no risk. You know the complete opposite of what us crypto degens have done for the last 11 years.
It's also because some or most of these people don't want to use exchanges, don't trust exchanges, want to manage their own keys and other things associated with trading crypto yourself.
Black rocks "SPOT" ETF is different in which it allows you to invest money from your social security, pension, 401k or IRA. These are normally extremely limited or not even offer to people at all. It also opens up the possibility to allow you to borrow against your assets leverage.
This ETF also opens up the ability to powerhouse players to invest into bitcoin which might otherwise be locked out and unable to take part in it due to government and securities restrictions.
The History Of Gold
For myself I like to look at history. Some people hate it but I feel a lot can be learned, improved upon and help figure out what might happen in the future or at least a realistic example of what could happen.
In this case GOLD is an awesome asset to look at as bitcoin is often now referred to as the worlds gold currency and store of value for the digital age.
Gold was not always traded via ETFs but instead had to be physically traded and backed 1:1 by the USD. It wasn't until 2004 that the FIRST ever gold spot ETF was launched called SPDR Gold. This opened when gold was valued at around $450 a oz. 2011 - $2,000 per oz. Sure it wasn't just the ETF that skyrocketed the value in fact there's two very key parts happening right there which we are also seeing repeat today.
Those two things are...
- A lack of trust in peoples governments
- High inflation
hhmmmm that seems to ring a bell with what's going on right now right?
So what happens if all of these so called large holders of funds like black rock do get this ETF passed. Let's say just 2% of the money from these asset companies flows into Bitcoin that seems pretty reasonable right?
If that where to happen it would essentially triple the current market cap of bitcoin that's now holding at roughly 600 billion dollars. It would shoot it to 1.8 trillion dollars or a roughly $80,000 Bitcoin (some will say $90,000 but I like to keep things a little real as assets are going to constantly move around quickly)
But it could also mean bitcoin shoots past $150,000+ and the key there is because of liquidity right now. There is so little bitcoin on the open market and less being printed (with a halving soon coming up) that a quick injection of money would drive high buys of the asset in order to obtain it.
This restricted print of 21 million tokens and quick injections of money but also outflows means it's hard to speculate really what could happen to the price of Bitcoin as these ETFs come online.
*This article is for entertainment purposes only and is not financial advice.