Approval of a spot bitcoin exchange traded fund in the U.S. is one of the most widely anticipated and delayed events in the roughly three-decade history of the ETF industry.
Those delays are popping up again. The Securities and Exchange Commission (SEC) recently put off decisions on some recent spot bitcoin ETF filings until next year. That’s not unusual – the commission has an established history of doing that. Nor does it mean those filings will be rejected. For now, however, there’s plenty of speculation and not much in the way of tangible results in terms of these ETFs coming to market in the U.S.
One thing that crypto bulls and market observers can agree on is that the price of bitcoin could surge in epic fashion if related spot ETFs are approved in the U.S. If that happens, established crypto-related ETFs such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO) could generate noteworthy upside of their own.
Why SATO Is Relevant Here
On the spot bitcoin ETF approval front, SATO is relevant for multiple reasons. First, the bulk of the ETF’s 36 holdings are bitcoin miners – an asset class intimately correlated to the digital currency’s price action.
Second, SATO’s largest holding is the Grayscale Bitcoin Trust (GBTC). That fund would likely rocket higher if a spot bitcoin ETF comes to life. In fact, Grayscale is attempting to convert GBTC to the ETF wrapper. GBTC accounts for 17.66% of SATO’s roster. The point is the approval of a spot bitcoin ETF has implications, most of them positive, for assets like SATO. Consider the following.
In a recent interview with CNBC, Fundstrat’s Tom Lee said a US-listed spot bitcoin ETF could lead to favorable supply/demand dynamics for the digital currency. That would potentially take its price to $150,000 and perhaps as high as $180,000. Those prices are more than five and six times where bitcoin resides at this writing.
Even if the SEC doesn’t approve a spot bitcoin ETF, there are avenues for bitcoin to deliver 2024 upside. Though not likely to the tune of reaching six-figure territory. Lee mentions the 2024 halving and the possibility of a more accommodative monetary policy from the Fed as potential catalysts for the cryptocurrency next year.
“Crypto is dependent on monetary policy. So, if inflation is cooling, then we can start to bet on forward financial conditions easing and central bank easing sooner,” Lee said in the CNBC interview. “That’s bullish for crypto or alternative assets.”
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