Cathie Wood’s forecasting of spot Bitcoin ETFs

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During an interview with Bloomberg yesterday, Cathie Wood said that, if approved, she is forecasting that spot Bitcoin ETFs could be approved all together. 

The hypothesis was already made a few weeks ago by Bloomberg Intelligence analyst James Seyffart, who commented on Cathie Wood’s statements yesterday by noting that they are in line with their predictions. 

Who is Cathie Wood and her involvement in the Bitcoin world

Cathie Duddy Wood is well known in both the mainstream financial and crypto environments. 

She is the founder, CEO, and CIO of investment firm ARK Invest and is well known for her performance, especially in the tech sector. 

However, the recent bear-market has actually somewhat downgraded both the company’s performance and its reputation, but it remains a benchmark for many. This is partly due to the fact that during bear-markets many people lose. 

ARK Investment Management LLC was founded only in 2014, and at its peak, in February 2021, it had $50 billion in assets under management. However, by May 2022, these assets had dropped to $15.9 billion. 

In 2020, their Innovation ETF became the largest actively managed ETF in the world, with $17 billion in assets under management and a 170% return, and the following year the company became one of the top 10 ETF issuers in the world. 

One of the new ETFs it is looking to issue is precisely on spot Bitcoin. 

ETFs on spot Bitcoin

For several years now, there have been ETFs that allow people to take a position on the price of Bitcoin using the normal platforms of traditional exchanges. 

However, the point is that, in the US, the SEC has so far only approved ETFs based on futures contracts that replicate the price movement of BTC, and none collateralized directly in BTC. 

In other countries, such as neighboring Canada, there are similar financial derivatives collateralized directly in BTC, but they are only available on Canadian exchanges. 

On US exchanges, on the other hand, for now there are only ETFs based on futures contracts, which replicate the price movement of Bitcoin less closely than spot Bitcoin ETFs could.

It has always seemed rather strange that the SEC would refuse to approve the numerous applications for the issuance of a spot Bitcoin ETF in the US, especially in light of the fact that it has instead approved those based on futures contracts on the price of BTC, as well as the fact that in neighboring Canada they had no problem approving them. 

According to the SEC’s statement, there are two different laws in the US for these two types of financial derivatives, so they should be considered different products with different rules. The law governing ETFs collateralized directly into the reference asset would at present prohibit the approval of a spot Bitcoin ETF in the US. 

Bitcoin ETF forecasting

All this line of reasoning could get jumpstarted thanks to BlackRock

Indeed, BlackRock is the world’s largest asset manager, and it recently filed an application with the SEC to issue an ETF on spot Bitcoin. 

The fact is that BlackRock has a historical approval rate of more than 99% for its ETFs, so it is believed that it has a good chance of obtaining approval. 

As soon as news broke of BlackRock’s application, many other ETF issuers in the US filed additional similar applications. 

Thus, as things stand, the SEC has to make a decision on several similar applications. 

At this point there are those, such as James Seyffart and Cathie Wood, who speculate that should the SEC lean toward approval, it could do that by approving all of these similar applications at once. 

Should such an event actually occur, it is possible that it could have positive consequences for Bitcoin’s price. 

However, while quite a few people believe such an event is likely, there is still a need to be very cautious, as the recent past would instead lean toward a new rejection by the SEC itself. 

Hence, at this point in time, predictions not only lack certainty but also run the risk of ultimately turning out to be wrong. 

It is worth noting that in June, when the BlackRock news broke, the price of Bitcoin had already risen, so in the event of a rejection it could fall. 

There is speculation that the SEC has until early 2024 to decide, and the decision could come a few weeks before Bitcoin’s halving.