NYDIG sees ETF boost Bitcoin to 8…

The SEC has been receiving requests for Bitcoin ETFs for ten years without taking any action. Will BlackRock change the game?

BlackRock wants an ETF

Bitcoin has appreciated by almost 20% since BlackRock surprised everyone by filing for a spot ETF on June 15.

In the absence of an ETF, tens of billions of dollars have been invested in substitute structures. These include trusts such as the Grayscale Bitcoin Trust (GBTC).

There are also ETFs based on futures contracts and spot ETFs outside the USA. Or MicroStrategy, which holds massive reserves of bitcoin. Buying MSTR shares is like investing in Bitcoin.

These products are worth $29 billion and are nowhere near as practical as a spot ETF. For NYDIG, a BlackRock ETF would have many advantages:

• ETF investor protections
• The prestige of BlackRock and the iShares franchise
• familiarity with brokers’ buying and selling methods
• Simplicity of position reporting, risk assessment and tax returns
• Better liquidity than private funds
• Potentially lower costs (certainly compared to GBTC)

Comparaison avec l’arrivée de l’ETF adossé à l’or

Gold ETFs are worth over $210 billion. Nearly half of this is in North America.

Although substantial, this sum represents only 1.6% of all the gold in the world, or around $13,000 billion. That’s 24 times more than Bitcoin (~$520 billion).

Incidentally, central banks hold 17.1% of all gold, compared with 46% for jewelry.

Bitcoin, on the other hand, is not held by central banks and is not used to make jewelry. As a result, a larger proportion of BTC is already held in various funds (4.9%), compared with 1.6% for the barbaric relic.

As NYDIG puts it:

« The numbers are striking on an absolute dollar basis: over $210 billion is invested in gold funds, while only $28.8 billion is invested in Bitcoin funds. Bitcoin is about 3.6x more volatile than gold, meaning that on a volatility equivalent basis, investors would require 3.6x less bitcoins than gold on a dollar basis to get as much risk exposure ».

NYDIG therefore estimates that an ETF could result in $30 billion flowing into potential Bitcoin ETFs.

Impact of the ETF on the value of Bitcoin

NYDIG’s scenarios are based on a currency multiplier of 10x. That is, every dollar invested in an ETF could translate into a $10 increase in Bitcoin’s capitalization.

[There’s no magic, the $9 difference will come from the rest of the world’s investors who will invest after being reassured by BlackRock’s ETF].

At the top end of the range, $100 billion invested in Bitcoin ETFs would induce a $51,000 rise in Bitcoin. Bitcoin would then be worth over $80,000 per BTC.

Still according to the same prediction (10x), an inflow of $50 billion into ETFs would result in a BTC worth $55,000.

For this to happen, the ETF would have to be approved by the SEC. In the knowledge that any delay is ultimately good news. It gives the masses more time to invest before Wall Street.