As the long-awaited spot Bitcoin (CRYPTO: BTC) ETF inches closer, cryptocurrency analysts and traders are debating: will it be a “sell the news” event or ignite the next bull run?
ETF bulls cite three reasons why an approval could spark massive inflows into Bitcoin:
Unit bias
Institutional adoption
Fear of missing out
Here is how experts see them play out.
Unit Bias: Bitcoin Becomes ‘More Affordable’
Gabor Gurbacs, founder of VanEck’s PointsVille, makes an intuitive claim: “Bitcoin exposure looks more affordable” if investors buy shares of an ETF instead of fractional Bitcoin, he says. He highlights the concept of unit bias: people prefer owning whole units of something rather than fractions.
With Bitcoin hovering around $46,000, many potential investors feel priced out.
But an ETF, with shares “removing three zeros,” retail investors may become more interested. According to Gurbacs, not everyone knows you can own fractional Bitcoin:
I was surprised that a good number of people didn’t know that one can own a fraction of a Bitcoin and even more frequently people didn’t want to own a fraction of a coin.
Owning a full share feels better than owning 0.001 Bitcoin. Seems like a a small thing but it’s a big thing.
— Gabor Gurbacs (@gaborgurbacs) January 6, 2024
This contributes to his ultra-bullish price target of $2.5 trillion Bitcoin flows. Gurbacs is also not the only analyst with such high price targets.
Institutional Adoption: How Much Money WIll Flow In?
VanEck CEO Jan van Eck raises another exciting prospect: institutional adoption.
With RIAs (Registered Investment Advisors) managing a staggering $114 trillion in assets, even a small allocation to Bitcoin via an ETF could have a massive impact.
Scott Melker, host of the Wolf of All Streets podcast, puts it into perspective: a mere 0.5% allocation from RIAs would translate to $570 billion, surpassing Bitcoin’s current market cap!
Jan van Eck’s ongoing poll on X predicts a higher than 50% chance that inflows will exceed $30 billion in the first year:
If spot #btcETF’s are launched in the next few weeks, how much do they raise, net, by the end of the year including Grayscale’s assets today of about $25 billion?@gaborgurbacs @ramahluwalia @davenadig @vaneck_us
— Jan van Eck (@JanvanEck3) January 7, 2024
Such inflows…
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