Bitcoin has a chance of increasing in the final months of 2021, as the first ETF pegged to the cryptocurrency was launched this week.
According to Tom Lee, the founder of Fundstrat, and crypto expert, the release of the ProShares Trust fund might help bring more money into bitcoin by many new retail and other investors. Because of this, prices for bitcoin might jump higher.
Fund company ProShares created the Bitcoin Strategy ETF using the ticker “BITO” this week, becoming the first United States ETF linked to cryptocurrency, a milestone for the new digital-asset sector, which was started back in 2008.
The potential of an ETF, which in theory will give more people access to bitcoin without needing to worry about custody problems for the virtual asset, has pushed bitcoin prices to almost a record high close to $65,000.
Lee stated that one of the two factors that could push bitcoin even higher is the expectation that this launch will bring in greater inflows. The second reason is that only some investors are currently exposed to bitcoin. With a new avenue to buy cryptocurrencies safely likely to support more buying.
Fundstrat estimated that around 93 million households now own stocks, while only 40 million own some bitcoin, with average balances per household being around $10,000 for bitcoin, a small fraction of the average $200,000 in equities per household.
“Crypto is around 1% of liquid assets,” said the Fundstrat executive.
However, Lee’s “back of the envelope” data suggests inflows into the new ETF will be a key near-term supporter for bitcoin’s price.
“We do not know the exact amount of U.S. households that own bitcoin, but we know it is not as widespread as equities,” Lee stated, in a research note this week.
Lee speculated that the Bitcoin ETF demand might rise by $50 million per day, if the new fund BITO proves anywhere near as popular as the Invesco QQQ Trust QQQ ETD. The QQQs has around $190 billion in assets, and another fund connected to bitcoin, Grayscale Bitcoin Trust GBTC has around $32 billion in their asset pool, making it the top crypto fund in size.
Author: Steven Sinclaire
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