Analysts say Bitcoin ETFs will take a big step toward approval

Analysts are weighing what will happen next as the financial world waits for the first Bitcoin ETF to be approved by the U.S. Securities and Exchange Commission — especially as the close begins late Friday.

“Okay,” Bloomberg analyst James Seifert said on Twitter.[BlackRock’s] There is also a 19b-4 amendment. Expect to see 11 of these tonight.

Sure enough, by 6pm on Friday, all Bitcoin ETFs had filed their 19B-4 forms with the SEC.

Like stock exchanges or investment companies, they file a 19b-4 with the SEC to file for rule changes. The form, which outlines the changes and the reasons for them, will undergo public review and await SEC approval.

“We've heard that the SEC has been working with the issuers on 19B-4s,” Bloomberg senior ETF analyst Eric Balchunas said in an earlier interview with Rugged Radio. “They go back and forth on drafts. That's why we've seen the S-1 updated. But the 19B-4s edits went to the SEC. Not checked again.

“So when we see them come back again, we know the SEC signed them off as final,” he continued.

In an interview with Rug Radio's Balchunas on Friday, Twitter Space suggested that once the SEC starts approving Bitcoin ETFs, the asset class could be in the billions.

“A couple of billion would be a solid new year for any category, but I'd be a little more optimistic, like $10 billion a year,” Balchunas said. “It's the short term that's hard to predict here. In the interim, we'll see that, maybe in the ballpark [$30 billion] to the [$50 billion] More than three years. And then maybe in five to ten years gold will come to a place where it's worth $100 billion.

Driving Balchunas' bullish statement was the high number of investment firms filing Bitcoin ETF applications with the US Securities and Exchange Commission, including the world's largest investment firm, BlackRock.

This is where I think I'm more optimistic that BlackRock has these model portfolios. And they have over $100 billion,” he said. “So if you put even 1% into this new ETF as an allocation, that's a billion dollars.”

Bitcoin ETFs track the current price of Bitcoin and should work in tandem with Bitcoin inflation, giving investors exposure to the digital asset without having to buy and store it.

“I would say that ETFs are a long bridge between those two worlds, which is again very interesting and fascinating.” Balchunas said.

Balchunas cited the fall of cryptocurrency exchange FTX and the damage caused to the market by the arrest, trial and conviction of founder Sam Banman-Fried.

“While FTX is driving the smaller fish out of crypto, the bigger fish are in the lake, which are these ETFs,” Balchunas said. “They're hard to please, and they circle the bait. You won't get them right off the bat like the smaller fish, but when the bites come they should be bigger and more substantial, but I don't see a crazy feeding frenzy.

Balchunas predicts that cryptocurrency trading will become more cost-effective and efficient in the future, with transaction fees significantly reduced. This fee reduction is in stark contrast to the high commissions charged by current platforms such as Coinbase.

“Five to ten years, even two years from now, you will find it very cheap, very liquid. [market]meaning liquidity when you trade, is just a basic point, so Coinbase's commissions look like highway robbery.

Balchunas highlights the changing outlook of retail investors, which he says will increase credibility and trust, highlighting the potential benefits of well-known brands and regulatory approval from the Securities and Exchange Commission (SEC).

“Retail investors don't have the FOMO they did in 2021,” Balchunas said.

Edited by Ryan Ozawa.