Daily Management Review

Analysts say 'Very Significant Upside' can Result from a Bitcoin ETF


01/12/2017




Analysts say 'Very Significant Upside' can Result from a Bitcoin ETF
Bitcoin followers are hopeful that a fund that tracks the cryptocurrency would get approval and analysts are of the view that it would ultimately provide a major boost to its price.
 
Such an exchange traded fund has been proposed by Cameron and Tyler Winklevoss and regulators at the Securities and Exchange Commission are weighing whether to approve the fund. This proposal came into being more than three years ago and the SEC has been considering the proposal since then. The ETF is being looked to be listed on the Bats exchange by the Winklevoss brothers.
 
According to investment bank Needham and Co, it would attract a flood of investor cash that could hit $300 million should the fund gain approval. As of Tuesday afternoon trading, the total value of bitcoins in circulation was $13.8 billion.
 
That's the good news for people dealing with the cryptocurrency.
 
However there is very little chance the SEC actually will go ahead and approve the ETF, believes the Needham analysts and this is the bad news for the enthusiasts. The chances are probably less than 25 percent, they say.
 
"In contrast to most of the people that we speak to in the industry, we think the probability that a bitcoin ETF will be approved in 2017 is very low," analyst Spencer Bogart said in a research note. "To be clear, we don't see any specific reason to disapprove the Winklevoss Bitcoin ETF, but, instead, think that the confluence of fear, uncertainty and doubt coupled with basic incentives at the SEC will make it very difficult to get approval."
 
March 11 has been set as the deadline for a SEC ruling and many of bitcoin's avid followers who believe the fund will be approved by then. The above bit of information therefore can be news to them. Bitcoin is accepted by more than 100,000 vendors for payment and was created more than eight years ago as a digital currency. Because of several high-profile bitcoin thefts and its use in the underworld, it has generated controversy.
 
"We think the positive effect that a bitcoin ETF would have on the price of bitcoin is vastly underappreciated, and that the probability of approval is drastically overestimated within the industry," Bogart wrote.
 
However there are other positive indications as well.
 
Bitcoin will be fine, regardless of whether the ETF becomes reality, Bogart said. Bitcoin is up 102 percent over the past 12 months and recently had hit a brief peak above $1,000.
 
There was no immediate comment from the Winklevoss to media inquiries.
 
"Overall, this is a low probability event with a very significant upside," Bogart said of the ETF. "Ultimately, while it appears there is significant pent-up demand from the investment public for such a vehicle, bitcoin itself certainly doesn't need an ETF and will continue on regardless of the SEC's decision."
 
(Source:www.cnbc.com) 






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