In the midst of the frenzy surrounding Bitcoin exchange-traded funds (ETFs), there have been numerous predictions about the future price of Bitcoin. Many believe that even if the Securities and Exchange Commission (SEC) approves the ETFs, there will be a “sell the news” event that will cause Bitcoin’s price to drop by 30% from its current levels.
However, I have a different perspective on this matter. In fact, I have a compelling argument to suggest that Bitcoin will actually rally another 10% above its current levels and surpass the $50,000 mark before experiencing a slight pullback in the short term.
With my extensive experience in traditional asset management, I understand the significance of statements made by major players in the market. When BlackRock, for example, publicly expresses confidence in the approval of ETFs, it is a clear indication that the market should take notice. BlackRock was particularly certain about the approval in the days leading up to January 10.
Furthermore, the applicants for the ETFs have disclosed important details about their offerings, especially the fees they plan to charge. These fees are quite reasonable within the ETF industry. BlackRock, for instance, intends to charge only 0.2% for the first 12 months or until the fund reaches $5 billion in assets, and then increase it to 0.3%. Invesco, on the other hand, will waive its fee entirely for the first six months or until it reaches the $5 billion milestone, and then charge 0.59%. ARK Invest and VanEck have set their fees at 0.25%, with ARK waiving the fee for the first six months or until the product reaches $1 billion. To put this into perspective, the largest Bitcoin futures ETF, ProShares Bitcoin Strategy ETF, charges 0.95%.
These fee disclosures clearly demonstrate that the providers are well-prepared and fully focused on acquiring assets. In fact, the level of competition among them is reminiscent of the fee wars that took place among providers of broad-market index ETFs, particularly the S&P 500 ETFs, in the early 2010s. With such strong momentum and anticipation, it is highly unlikely that the ETFs will be rejected at this stage.
Moreover, the ambitious asset acquisition goals of the providers indicate that they expect to attract billions of dollars into Bitcoin within a short period of time. They have conducted extensive research and consulted with numerous clients over the past few months, making their estimates highly reliable. If BlackRock, Invesco, and ARK meet their targets, they alone could bring $11 billion into Bitcoin within a year.
It is entirely plausible that we will witness a significant influx of money into Bitcoin through these investment vehicles. This development signifies the recognition of Bitcoin as a legitimate and regulated investment asset, on par with gold, which has a market cap over 10 times that of Bitcoin. Therefore, we can expect billions of dollars to flow into the ETFs, along with increased interest from investors who are more knowledgeable about cryptocurrencies and will access Bitcoin through exchanges. Major players like Coinbase will benefit from this increased interest, as will the broader cryptocurrency market, which tends to follow Bitcoin’s price movements.
Considering the positive impact of the ETF approval, I do not anticipate the strong selling pressure that some are predicting. A closer look at the current dynamics of Bitcoin investments reveals that a 30% sell-off does not make sense. As of October, the percentage of long-term Bitcoin holders is at its highest level in history, reaching 76%. These long-term holders have been waiting for this moment and most of them anticipate Bitcoin reaching an all-time high of $100,000 or more. It is simply not the right time in the cycle for them to sell.
Therefore, the only selling pressure will come from short-term traders who have set specific strike prices for their orders. Once these strike prices are reached, we can expect a temporary pullback, which is typical during Bitcoin rallies. However, as we have seen in recent months, these pullbacks are short-lived and often followed by a rebound in prices. This rebound will not be solely driven by the ETF approval, as this year also marks the Bitcoin halving. In the past, these events have consistently been followed by significant Bitcoin rallies to new all-time highs, and it is reasonable to expect the same this year.
Keeping all of this in mind, it is highly likely that Bitcoin’s price will rise by 25% to 30% in 2024, reaching around $60,000 from its current level of $46,000.
Of course, it is important to acknowledge that there are potential threats to this rally. The approval of the ETFs will intensify regulatory pressure on the crypto ecosystem, which could have a downward effect on prices. Additionally, the global macroeconomic situation will also play a role, and it remains to be seen whether it will be positive or negative. However, overall, 2024 is a year where the fear surrounding Bitcoin is unwarranted. This is the year when Bitcoin finally becomes mainstream.
Lucas Kiely is the Chief Investment Officer for Yield App and has extensive experience in investment portfolio management. He previously held senior positions at Diginex Asset Management, Credit Suisse, and UBS. This article is for informational purposes only and should not be considered legal or investment advice. The views expressed are solely those of the author and do not necessarily reflect the views of Cointelegraph.