Cryptocurrencies continued their slight rises this morning, amid calm market trading since Monday, with the exception of the sharp fluctuations that we witnessed with the false news about approval to launch a spot Bitcoin exchange-traded fund (ETF).
As Bitcoin is trying to consolidate above the $28,720 level, Ethereum is also trying to maintain the $1,570 level.
These rises come amid what appears to be a state of optimism about the possibility of approving the conversion of the Grayscale Bitcoin Trust (GBTC) into an spot ETF, after the Securities and Exchange Commission (SEC) failed to appeal the court’s decision that was in favor of GBTC, which ordered the agency to reconsider its decision of refusal.
While these optimistic expectations from the markets were reflected in the continued reduction of the discount from the net asset value of GBTC to about 13%, which is the lowest levels that we have not seen since the year 2021.
We also saw a report from CryptoQuant talking about the possibility of the cryptocurrency market growing by an additional trillion and that asset managers may direct $155 billion of assets under management to Bitcoin.
While the spot Bitcoin ETFs submitted by a number of major asset managers may not see the light of day before next year, the SEC may also reject these applications, opening the door to more legal battles.
In addition, the high fluctuations in the price of Bitcoin that occurred on Monday as a result of false news may constitute more incentives for the SEC to refuse to launch these funds, based on the basic argument about price transparency.
Indeed, the launch of these ETFs may add billions in inflows to Bitcoin, enabling more investors to enter this market. But I doubt the ability of these funds, if they are actually launched, to drive sustainable growth for Bitcoin or other cryptocurrencies.
To illustrate my point, look at Zoom stock for example. Asset managers own more than 34% of all the company’s shares, in addition to more than another 30% by other institutional investors. Several major equity ETFs also have Zoom stock among their holdings, such as the ARK Innovation ETF (ARKK), Invesco QQQ Trust (QQQ), and Vanguard Total Stock Market ETF (VTI).
However, the stock is down 7% year-to-date, despite the bullish trends in the stock market at many times during the current year. It has also down about 90% from its historical highs, despite the real benefit and widespread use of the products.
The company has expanded to include all countries of the world, whether by individuals, institutions or large businesses. This is what cryptocurrencies lack so far, namely widespread adoption and use.
Add to this the state of uncertainty and uncertainty as a result of ongoing regulatory concerns in crypto market, fueled by ongoing legal battles that have continued for years, as well as widespread collapses and fraudulent activities in the sector.
In conclusion, talk about the possibility of Bitcoin reaching $100,000 levels and other fanciful predictions must be responsible and based on sufficient objective evidence.