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Talks surrounding a possible have been a staple of the cryptocurrency market for some time. However, according to one major analyst, Bitcoin is still far too illiquid of an asset for this to be a possibility. ETF
A Bitcoin ETF may be ‘years away’ Thomas Lee, the co-founder of Fundstrat, recently said in an interview. Provocatively, he argued that Bitcoin’s price needed to be $150,000 in order to be liquid enough for an ETF to even be possible.
Lee outlines two major reasons why we shouldn’t expect an ETF anytime soon:
According to Lee, the equilibrium price required for enough liquidity for a Bitcoin ETF would put the leading cryptocurrency at around the $150,000 price point. Obviously, we are many years away from this being realized. Simply put, Bitcoin is far too small for the SEC to take a risk with approving an ETF, and the demand would also not be sustainable at current liquidity levels.
Words of ETF wisdom from @fundstrat.
We're still only playing in a puddle and an ETF requires at least a lake. https://t.co/Zbre2mz4nn
— Bryce Weiner (@BryceWeiner) October 22, 2019
We have to keep in mind the conditions that led to the first gold ETF only came about in 2003. By then, gold already had a market capitalization of over $2T. This trumps Bitcoin’s current total market value and indicates that regulators are not willing to gamble on a financial asset that is still relatively marginal in the greater economy.
Considering this data, we can assume that serious considerations and SEC approval won’t happen until Bitcoin breaks the $100k level. For now, according to Lee at least, it’s still far too early.
Do you agree with Lee that a Bitcoin ETF is simply unfeasible right now? Let us know your thoughts below in the comments.
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