An ETF approval will send bitcoin to $330,000…
That’s according to financier and political insider Anthony Scaramucci.
You may remember the “Mooch” as President Trump’s short-lived press secretary. (He and Trump parted ways after just 11 days on the job.)
He was also our keynote speaker at our 2019 Legacy Investing Summit in San Diego, California.
But Scaramucci is best known as a major player on Wall Street and the founder of investing firm SkyBridge Capital.
SkyBridge was an early investor in BlackRock’s bitcoin trust product. That’s the forerunner in the race to become America’s first exchange-traded fund (“ETF”) that invests directly in bitcoin.
This is known on Wall Street as a “spot” ETF. Unlike futures prices, which are based on expected future values, it tracks bitcoin’s price in real time.
Speaking on the crypto YouTube channel Altcoin Daily on Friday, Scaramucci predicted that BlackRock’s ETF would launch “in the first half of 2024.”
When that happens, he said we’d see a parabolic rise in the price of bitcoin. As he put it…
There will be an army of people, salespeople, financial consultants, financial advisors, and private bankers that will have digital assets as part of their long-term tactical capital allocation portfolios.
Think of the magnitude of that, if there’s $100 billion that flows in bitcoin […] that could have an 11-times factor in terms of valuation. So, you could see bitcoin go from a $600 billion asset to a $600 trillion asset.
And if bitcoin goes up from its price of about $30,000 by a factor of 11, it will reach the $330,000 mark.
Now, Scaramucci isn’t the first guy to predict that a spot bitcoin ETF will send bitcoin soaring. Colleague Teeka Tiwari described it as “super bullish” in these pages back in February 2021.
But given that we’re now moving out of the bitcoin trust era and into a bitcoin ETF era, today I’ll unpack why that’s so bullish for bitcoin.
Then we’ll look at an alternative way to profit as the price of bitcoin surges.
ETFs are popular ways to get exposure to market trends…
As of June, assets invested in global ETFs have hit a total of $10.3 trillion.
If you’ve been investing for some time, you’ll no doubt have some ETFs in your portfolio.
But if you’re just starting your investing journey, ETFs trade on an exchange such as the New York Stock Exchange like a regular stock.
But they give you exposure to either a basket of stocks – say all the stocks listed on the Dow or the S&P 500 – or a commodity such as gold.
And a bitcoin ETF has three key advantages for investors over the bitcoin trusts that exist today.
First, a bitcoin ETF will closely track the quoted bitcoin price. Due to how they’re set up, shares in bitcoin trusts often sell at a premium – or extra charge – over the quoted bitcoin price.
For instance, the largest bitcoin trust, the Grayscale Bitcoin Trust (GBTC) has traded at a premium as high as 43% over the price you could buy bitcoin for on an exchange.
And the opposite is also true. At times, shares in GBTC sell at discounts as high as 49% to the price of bitcoin.
That’s great if you’re buying shares in GBTC because you’re able to get exposure to bitcoin at a discount. But it’s terrible if you’re selling your shares, and you’re getting less than the price of bitcoin in return.
Second, a bitcoin ETF will carry a lower annual fee than bitcoin trusts. GBTC’s fees cost 2% a year. By contrast, the average annual fee U.S. ETFs charge is 0.5%.
And if regulators greenlight multiple spot bitcoin ETFs in the U.S., we can expect the different managers to bludgeon each other on fees so they can capture market share.
Third, ETFs are more “liquid” than trusts – meaning they’re easier to trade.
As I mentioned, ETFs trade on major exchanges like stocks. This allows for buying and selling throughout the trading day at market price.
GBTC, on the other hand, trades on something called the over-the-counter market.
It’s still possible to buy and sell shares of GBTC through your broker. But it’s not as easy… or as accessible… as buying shares in an ETF listed on a major exchange.
So, what happens when a spot bitcoin ETF launches in the U.S.?
The same thing that always happens when demand surges and supply is limited. Prices go up.
As you’re probably aware, an algorithm governs the supply of new bitcoins.
There’s a hard cap of 21 million bitcoins. And already, more than 19.5 million bitcoins have entered circulation. That’s 92% of the total supply.
And long-term investors hold most of that supply.
Figures from crypto news and data firm CryptoSlate show investors have held 14.8 million bitcoins for more than 155 days.
That means there are fewer than 5 million bitcoins available to change hands.
And according to YCharts, only roughly 270,000 bitcoins trade each day.
A spot bitcoin ETF would eat up a lot of that available supply.
It would be a predictable and more liquid way to invest in bitcoin. It would also provide a cheaper alternative to bitcoin trusts. And it would be a major sign of legitimacy for the cryptocurrency.
This will lead to an increase in demand for bitcoin from individual and institutional investors such as pension funds and hedge funds.
A spot ETF would also lead to reduced supply.
That’s because it would require the ETF issuer to buy bitcoins to back the ETF shares. This would reduce the circulating supply of bitcoin and put further upward pressure on its price.
Of course, nothing moves up in a straight line – especially crypto…
Even in bull markets, bitcoin tends to have sharp pullbacks, including drops of 50%.
Those kinds of moves are harrowing for those who buy and hold, even if they’ll make up for it in time.
That’s why there’s so much excitement about colleague and trading legend Larry Benedict’s “bitcoin skimming” event tomorrow night.
As I’ve been showing you, it’s a way to “skim” profits off bitcoin’s rallies and declines.
And Larry’s strategy delivers bigger gains than regular traders can achieve.
For example, he was able to close out a recommended bitcoin skim trade for an 87% gain from a 13.5% rally in bitcoin.
He was also able to close a recommended trade for a 72% gain as bitcoin dropped 19%.
Larry is unveiling his skimming strategy tomorrow night…
And with bitcoin on track for some big swings higher, you’ll want to have Larry’s expertise guiding you to steady profits amid the volatility.
That could help you turn the 11x move in bitcoin Anthony Scaramucci sees coming into even bigger profits.
Editor, The Daily Cut