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(Kitco News)
Bitcoin investors are waiting for regulators to approve the first U.S. spot bitcoin exchange-traded fund, and the likelihood of the Securities and Exchange Commission giving it the green light, is as high as 90 percent, according to Fred Thiel, the Chairman and CEO at Marathon Digital Holdings, the largest publicly traded crypto miner by hash rate in the world. “The odds are 90 percent that they’re going to approve. The question is, do they approve now or do they approve in January when more of these applications are due to be approved?” stated Thiel.
A Wave of ETF Approvals
At least nine asset management firms — including BlackRock, WisdomTree, Valkyrie, and others have applied for a Spot Bitcoin ETF. Thiel expects 5 applications to be approved at once, “My personal opinion is that they are going to approve a block of these ETFs, the SEC has been in active dialogue with Grayscale and others, which is a lot more progress than before. This means they are dotting the I’s, crossing the T’s and going through to make sure everything is buttoned up and ready to go.”
After BlackRock filed for a spot Bitcoin ETF in June 2023, it caused a surge in market optimism and sparked a wave of new ETF filings. The involvement of BlackRock, the world’s largest asset manager with over $9 trillion in assets, brought a sense of institutional validation and heightened expectations for Bitcoin’s future. The filing of BlackRock and the subsequent ripple effect caused in the industry instilled confidence and amplified the belief that Bitcoin was on its way to broader acceptance and mainstream recognition as an investment asset. This sentiment fueled market fervour, resulting in a notable surge in both trading volume and price during that period.
Bitcoin’s Price Surge and Future Forecast
Last week, the price of Bitcoin hit an 18-month high climbing to $37,970. The price of bitcoin has more than doubled since the start of 2023, but it’s still well below its November 2021 peak. Marathon’s models have a price forecast for Bitcoin that indicates a potentially significant increase in value by 2025. “By January 2025, I think a likely scenario would be somewhere between $50,000 and $80,000,” Thiel continues, “I think by the end of 2025, if Bitcoin were to follow historical cycles, that’s when we start seeing a six-digit price of Bitcoin.”
Thiel outlined his bear, base and bull price forecast ranges, for details watch the video above.
Buy on the Rumor Sell on the News?
In the lead-up to the potential of SEC approval of the first U.S. spot Bitcoin ETF, Thiel offered his insights into expected market reactions, “In scenarios like these, the norm is to buy on the rumour and sell on the news. However, with Bitcoin ETFs, we’re likely to see a more complex pattern. The initial reaction will probably be a surge in Bitcoin’s price following the approval announcement. This first wave will then give way to a closer analysis of how much capital is invested into these ETFs,” Thiel explained.
He highlights the unique situation where Bitcoin, as both the speculative instrument and the ETF commodity, could drive its demand, leading to a possible self-reinforcing price increase. “The real market indicator will be the post-approval trading activity of these ETFs. Strong initial investment could propel Bitcoin’s value further, while underwhelming investments might lead to a market correction,” he adds, underscoring the speculative and dynamic nature of Bitcoin’s potential price trajectory in response to the ETF developments.
Implications of a Spot Bitcoin ETF
U.S. investors can currently buy bitcoin futures ETFs, which own bitcoin futures contracts, or agreements to buy or sell the asset later for an agreed-upon price. The long-awaited bitcoin spot ETF would invest in the digital asset directly. Thiel underscored the significance of ease and accessibility that a spot bitcoin ETF would introduce to the market, drawing parallels with gold ETFs’ influence on gold investments. “By removing friction, making it safer, making it easier for people to hold Bitcoin, it’s going to drive a lot of increased allocation to Bitcoin, and you’re also going to have retirement accounts being able to invest in Bitcoin for the first time because of the ETF.”
Bitcoin Becoming an Uncorrelated Asset
Bitcoin is transforming into an uncorrelated asset according to Thiel, “the correlation to equities has diminished. The correlation to gold has diminished as an inflation hedge. I think in a world of lots of uncertainty, people who are believers in Bitcoin will only double down and move more of their assets into Bitcoin.”
Commenting on how Bitcoin which is supposed to be seen as a safe haven asset, may react to escalating geopolitical tensions Thiel said, “In the developing world, where high inflation, currency controls, and unstable government exist, Bitcoin serves as a means for individuals to protect their assets, ensuring easy transportability, safety, and self-sovereignty. Examples include the Ukraine crisis, where people on both sides of the conflict turned to Bitcoin. If the current conflict spreads across the wider Gulf region, it could lead to an increased flight to asset protection and self-sovereignty through Bitcoin.”
The Halving Cycle
In addition to the market movements influenced by the ETFs, the Bitcoin community is closely watching the upcoming halving event. Bitcoin halvings are scheduled to occur once every 210,000 blocks – roughly every four years – until the maximum supply of 21 million bitcoins has been generated by the network.
The next bitcoin halving is expected to occur in April 2024, when the number of blocks hits 740,000. It will see the block reward fall from 6.25 to 3.125 bitcoins.
The halving has historically been a catalyst for significant price movement. Currently, miners release approximately 900 Bitcoin per day, and this will decrease to 450 Bitcoin per day.
To get Thiel’s views on the impact of the halving on Bitcoin Miners and the price of Bitcoin, watch the video above.
Stay tuned for Part 2 of the interview, where Thiel will delve deeper into the macroeconomic factors and potential risks that could influence the future direction of Bitcoin.
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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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