Perhaps the primary driver of the recent rally in crypto is speculation around ETFs being approved, potentially sooner than later.
$ETH finally saw some action earlier this month when it was revealed Blackrock was also filing an Ethereum ETF. As expected in crypto, there’s also incorrect info being spread on the topic. From phony ETF approvals to fake XRP filings, it pays to be able to filter out bad information.
As we head into the halving, ETFs may serve as a bridge into a bull market.
Stay alert, stay informed ⬇
Crypto Market Update:
- Top Gainer (24H) in the top 50 mcap: Kaspa $KAS increased in price by 26.1%.
- Top Loser (24H) in the top 50 mcap: Lido DAO $LDO is down -4.5%.
- The total crypto market cap has seen a increase by 5.1% to stand at $1.41T.
- BTC dominance in the market is currently at 52.6%.
- The median gas price on Ethereum over the past 24 hours has been 36 gwei.
Observations
- The market is seeing a shift towards more fundamentally sound investments over memecoins, indicating a more strategic approach by Smart Money.
- Newer projects have not yet attracted significant Smart Money holdings, suggesting a cautious stance from investors.
- $PAAL has entered the $1M+ Smart Money holding category, marking its potential growth.
- $GROK has been a profitable venture for Smart Money, with notable gains made by key traders.
There is longstanding anticipation for a Bitcoin or crypto-linked ETF in the crypto community.
The first ETF proposal was made by the Winklevoss twins in 2013, which, along with subsequent applications, was rejected by the SEC.
There is current optimism surrounding BlackRock's application.
Eric Balchunas, Senior ETF Analyst at Bloomberg, says that the Bitcoin market is eager for positive news to fuel a rally.
In his opinion, an ETF approval would be a significant event, acting as a bridge to advisor assets.
Advisors, who typically manage wealth for older, affluent clients, favor ETFs for their ease, cost-effectiveness, and tax efficiency.
There is $30 trillion in capital managed by advisors, presenting a significant opportunity for influx of money into Bitcoin ETFs.
There are also mutual benefits for various stakeholders in a Bitcoin ETF.
The crypto community sees it as a means to access Boomer assets, while asset managers view it as an opportunity for higher fees compared to traditional ETFs.
There is an appeal for boomers seeking Bitcoin exposure without digital wallets' complexities, and the risk that self-custody comes with.
Stakes are high in the Bitcoin ETF saga, which has spanned a decade.
Many expect the approval and launch of these ETFs in early 2024.
There are a couple of reasons for optimism surrounding ETF approval odds:
a court ruling that invalidated the SEC's original grounds for denying ETF approvals
the significant influence of BlackRock entering the ETF space.
Grayscale ‘The World’s Largest Crypto Asset Manager‘ argues in their lawsuit that there is inconsistency in the SEC's approval of Bitcoin futures ETFs but not spot ETFs.
The court found the SEC's logic illogical, leading to the invalidation of their grounds for denying spot ETFs.
The SEC had 45 days to appeal the court's decision but didn't, suggesting that the SEC, led by Gary Gensler, may have changed their mind regarding spot ETFs.
Google Trends Search Data for “Bitcoin ETF”
Hong Kong and Singapore show the most interest by search volume, aligning with pro-crypto actions from their governing financial bodies
Bitcoin ETF Approval: Timelines, Market Impacts, and $GBTC's Role
Eric Balchunas says that approval could come before the deadline, possibly within the next eight weeks. He expects multiple ETFs to be approved simultaneously to avoid giving a competitive advantage to any single issuer.
Eric predicts a scenario similar to the ETH Futures ETFs, where several ETFs might be approved on the same day, based on readiness.
He expects a mix of Bitcoin and ETH ETFs, with some potentially launching a day later than others.
He recognizes the uniqueness of the situation, highlighting that there's never been a scenario where an ETF filing languished for a decade in regulatory limbo.
He contrasts this with the first ETF (SPY) and the first bond and gold ETFs, which were approved much faster.
Gold price performance following ETH Approval
SPY all time performance
Eric says that Bitcoin's status as a digital asset and concerns from politicians add to its complexity.
He explains the BI ETF traffic light system, comparing it to movie ratings.
This system categorizes ETFs based on their potential risks and unusual features, with Bitcoin futures ETFs being a red-light product due to the costs associated with rolling futures.
A spot Bitcoin ETF would ironically be a green-light product, less risky than a futures-based one which already exists.
This has been a talking point brought up by proponents of a spot ETF, and one that Gary Gensler has acknowledged.
Eric discusses the market demand for Bitcoin ETFs, citing the impressive launch of $BITO in October 2021.
He predicts a steady growth in this category, influenced by major players like BlackRock and Fidelity, and contrasts the anticipated reaction to the launch with the 2021 frenzy driven by retail investors.
Crypto ETFs: Bitcoin's Lead and Ethereum's Future
Eric predicts that Ethereum ETFs might follow Bitcoin ETFs but with a delay.
He expects that the SEC would first focus on Bitcoin before considering $ETH, reflecting on the SEC's cautious approach.
He confirms the low demand for $ETH future ETFs, attributing it to the general disinterest of retail investors and advisors in futures-based products.
He says that the lackluster performance of $ETH futures ETFs indicates a lack of unmet retail demand, predicting a more subdued response for any future spot ETFs.
Eric says that retail interest in crypto ETFs will exist but won't reach the frenzy levels of 2021.
He says that the tickers chosen for these ETFs ($IBTC, $BTCO, $ARKB) signal a focus on larger investors rather than retail.
Eric explains that the sober nature of these tickers is indicative of targeting the $30 trillion advisory asset market. He expects that eventually, one of the ETFs will become highly liquid, attracting institutional investors and hedge funds.
While Bitcoin dominates the global crypto ETF market, Ethereum might eventually gain a smaller share.
Eric describes the current investment climate as an "investor utopia" and suggests that Bitcoin might fit into a small portion of investors' portfolios dedicated to alternative solutions.
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