Will funds be able to buy all the BTC in circulation?

The long-awaited potential approval of a Bitcoin (BTC) exchange-traded fund (ETF) in the United States could mean that funds will fall as much as they can when the market experiences a sudden drop in Bitcoin supply, some market observers have predicted. With big-name firms like Ernst & Young awaiting approval from the US Securities and Exchange Commission (SEC) to spark demand from institutions, will the financial giants behind these ETFs leave any real Bitcoin in the market for the rest of us?

A US-based spot Bitcoin ETF could bring up to $30 billion in fresh cash to Bitcoin, crypto entrepreneur and investor Lark Davis estimates by September 2023. In such a situation, spot Bitcoin ETF issuers buy about 50% of all Bitcoin on crypto. Exchange to support their ETFs, he predicted.

Estimates suggest that somewhere the Bitcoin ETF will bring 20-30 billion fresh cash to Bitcoin. That buys half of all coins at current exchange rates.

For reference, here's what happened when gold first got an ETF approved on the US markets.

Will history repeat itself? pic.twitter.com/CBNvZgMq18

— Lark Davis (@TheCryptoLark) September 4, 2023

But buying as much Bitcoin as possible can be difficult for anyone, many industry executives and analysts agree.

“Theoretically, a company or government could try to buy a large amount of Bitcoin, but it's very impractical to get all the Bitcoin in circulation, and we still have a significant unreleased supply of Bitcoin,” Valkyrie CEO Leah Wald told Cointelegraph. Wald revealed that the Bitcoin supply is capped at 21 million coins, of which 1.4 million BTC have yet to be mined. she added.

“Bitcoin's decentralized nature and the fact that many holders are willing to sell at any price creates a natural barrier to monopoly.”

Matt Hougan, Chief Investment Officer at Bitwise – another side of the BTC ETF indicator Valkyrie – also believes that no one can theoretically establish a monopoly on Bitcoin.

“The principle of scarcity—a well-established economic principle—tells us that the price of a small commodity will rise to meet demand,” Hugan said. “In other words, if someone tries to ‘corner Bitcoin', the price will go up and up and the number of sellers will increase,” added the exterminator. However, Hugan admits that a person can still hold a large amount of bitcoins.

Jan3 CEO Samson Mou echoed Haugan's position, expressing his belief that it will be difficult to buy all the bitcoins in circulation due to the extremely high prices fueled by products like the Spot Bitcoin ETF. “The price that people are willing to sell increases when there are fewer coins available for sale,” he said.

According to Mow, BTC holders should seriously consider selling their bitcoins given the devaluation of fiat currencies such as the US dollar or the euro. he said:

“So as funds buy more BTC and increase their assets under management, it becomes harder and harder to find willing sellers.”

Despite the intense competition between Bitcoin ETFs, these funds cannot try to buy all the Bitcoin in circulation, according to David Gerrard, the author of the book and the 50 Foot Blockchain Crypto Blog Attack.

RELATED: ‘Can be resisted' or smooth sailing? Bitcoin ETF where experts can weigh in

“ETFs are part of using Bitcoin as a dollar derivative. The issuer does not care about the cryptocurrency. They think about the dollars they can get from them,” Gerard told Cointelegraph. He added:

“Many holders have more bitcoins than dollars trying to buy them – the markets are thin.”

Although many industry watchers expect Bitcoin ETFs to develop strong demand and thus have a positive impact on the price of BTC, some executives such as BitMEX co-founder Arthur Hayes believe that a successful ETF could “completely destroy” Bitcoin. According to Cathy Wood, CEO of ARK Invest, some investors may “sell on the news” of the spot Bitcoin ETF license in the short term.

Meanwhile, some believe that allowing Bitcoin ETFs located in the United States will have no effect on markets, such as Bitcoin ETFs that have been trading in other parts of the world, such as Canada.

However, the size of US capital markets is so large that this comparison may not be meaningful, according to Eric Balchunas, an analyst at Bloomberg ETAT. Balchunas and other analysts predict that the crypto market has never seen such a potential capital injection.

Magazine: Legislators' fear and skepticism fuel proposed crypto regulations in the US.