When the U.S. Securities and Exchange Commission approved the first bitcoin ETFs earlier this month, it marked a milestone in the legitimization and mainstream adoption of cryptocurrencies. I gathered a panel of experts across cryptocurrency investing, fintech research and policy analysis to unpack the deeper significance of this watershed moment.
I reached out to Graeme Moore, head of tokenization at Polymesh, a security token platform. Moore brings institutional financial expertise combined with an insider’s view on blockchain innovation.
Additionally, I spoke with three analysts at Weiss Ratings who evaluate financial institutions and cryptocurrencies: Juan Villaverde, who built a crypto-timing model; Marija Matic, a contributor to Weiss Crypto Daily and other crypto publications; and Bruce Ng, who takes a data-driven approach to crypto analysis.
These experts weighed in on everything from crypto’s short-term price dynamics to long-range predictions on bitcoin’s future.
When it comes to bitcoin’s
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investment potential, Moore saw explosive upside ahead: “$100,000 per BTC by end of 2024.” He said he believes the launch of bitcoin ETFs unlocks investment dollars that previously could not access this market. A price surge can happen when an essentially infinite amount of capital attempts to pour into the inherently finite bitcoin asset, he said. Such a supply-demand imbalance could drive bitcoin prices exponentially higher in coming years, he added.
When asked about risks, Moore highlighted the prospect of significant bitcoin supply centralization. If Wall Street institutions or a single country gained control of a majority of bitcoin, it could compromise decentralization principles. But Graeme argued that bitcoin has evolved into something greater than a mere asset or technology — it encapsulates a powerful idea. And ideas are resilient, he says.
Expanding on bitcoin’s future, Moore said he crypto wallets assuming central bank-like roles. These storehouses offer instant settlement, user control over one’s finances, and interoperability between assets and applications. This freedom to control your own money remains an inherently appealing concept for many.
Future shock
As Matic sees it, demand shocks stemming from ETF activity could propel prices higher. This may happen when funds recognize the limited supply of crypto available on the free market. Most bitcoin is held by long-term holders unwilling to part with their coins. The coming scarcity and supply-demand imbalance could exert substantial upside price pressure over time, she pointed out.
In terms of market sentiment, Matic observed that uncertainty over bitcoin still lingers. But she said she suspects that early activity in bitcoin ETF trading has been net neutral or negative. How this unfolds over the year ahead will prove informative.
Longer term, Matic said she envisions bitcoin rivaling or exceeding gold’s appeal. Its predictable monetary policy and liquidity give it viable advantages over gold
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that are gaining recognition. If these superior attributes drive adoption by central banks and nation-states, a compelling multi-trillion dollar market cap expansion for bitcoin seems feasible.
Read: Why the launch of bitcoin ETFs threatens the market for gold
Volatility rules
Like gold after the launch of gold ETFs two decades ago, some choppiness in bitcoin prices is expected. But solid fundamentals should prevail, Ng said.
When asked about risks, Ng said that Wall Street institutions could potentially gain too much control over bitcoin supply, even getting involved in crypto mining. If a single party amasses a majority position, it would compromise bitcoin’s decentralized ethos. Yet bitcoin has survived chain splits before, Ng said, and even emerged with a variant more aligned with decentralized ideals. The social coordination of node operators and bitcoin miners would likely serve as a check and balance against excessive Wall Street centralization of the coin.
Ng said he expects the launch of bitcoin ETFs paves the way for ETFs across more crypto assets, like Ethereum. Beyond ETFs, he said he sees potential for tokenized financial assets through blockchain integrations in traditional banking. Mainstream comfort with bitcoin sets the foundation for this financial infrastructure revolution.
Long term, Ng foresees the crypto market cap exceeding $10 trillion in this decade. Bitcoin in particular may capture 30%-40% of the crypto market, spurring prices to between $185,000 and $246,000 per coin. Moreover, he said, as bitcoin’s role as an inflation hedge becomes more widely understood, it will be recognized as a viable hard asset.
Bitcoin over bonds
Villaverde said he envisions a capital rotation out of bonds and into bitcoin and other alternative assets, driven by a loss of trust in indebted governments’ ability to repay bonds without currency debasement. Villaverde argued that bitcoin’s monetary attributes make it a prime destination for this migration.
Compared to gold, farmland, or fine art that each hold trillions in valuation, crypto markets remain relatively small, Villaverde said. He sees tremendous upside for bitcoin specifically, as investors recognize its advantages in scarcity, auditability, predictability and transportability versus other stores of value. Even the most conservative projections suggest bitcoin’s current sub-$1 trillion market cap radically undervalues its total addressable market and utility.
Villaverde dismissed the notion that bitcoin may become too expensive for retail at higher prices. He highlighted that the cryptocurrency’s infinite divisibility ensures accessibility to all. And the creation of instruments like ETFs enhances bitcoin’s appeal for investors lacking resources or technical proficiency to directly hold the asset.
Looking ahead, Villaverde said bitcoin can capture as much as 10% of gold’s market share. By his calculations, this would equate to a $1 million price tag per bitcoin — confirming its potential as an equal or superior monetary asset.
More: How to trade the new bitcoin ETFs in your 401(k) or IRA
Plus: What history says about first-of-a-kind ETFs as bitcoin products debut
Read the full article here
