The potential approval of a spot Bitcoin ETF within the United States has stirred appreciable consideration in latest weeks. Dan Morehead, CEO and founding father of Pantera Capital, has now shared invaluable insights on this matter in his newest “Blockchain Letter”, emphasizing the distinctive circumstances surrounding this occasion.
Morehead challenges the standard Wall Street mantra, “Buy the rumor, sell the news,” questioning its relevance within the present spot ETF context. He displays on how this adage performed out traditionally, particularly citing the CME Futures launch and Coinbase’s public itemizing. Both situations exhibited vital worth surges within the BTC market earlier than their respective occasions, adopted by steep downturns, aligning with the adage’s prediction.
Spot Bitcoin ETF Is A “Buy The Rumor, Buy The News” Event
In his detailed evaluation, Morehead recounts how the Bitcoin market rallied dramatically, as much as 2,448%, main as much as the CME futures launch. However, this bullish development abruptly reversed on the very day the futures have been listed, marking the beginning of an 84% decline right into a bear market. He parallels this with the Coinbase public itemizing state of affairs, the place the market once more surged, this time by 848%, reaching its peak on the day of Coinbase’s itemizing, solely to be succeeded by a 76% drop.
Morehead, with a contact of humor, notes in his letter, “Will someone please remind me the day before the Bitcoin ETF officially launches? I might want to take some chips off the table.”
However, “this time is different,” states Morehead. Further delving into the potential affect of a spot ETF, he posits that such an ETF would symbolize a big step within the adoption. Unlike futures, which he argues have been a “step backwards,” the spot ETF may essentially change entry to BTC, opening up new investor swimming pools and doubtlessly altering the demand operate for Bitcoin completely.
Unlike the earlier occasions of the CME futures and Coinbase itemizing, which had little real-world affect on Bitcoin accessibility, Morehead believes the spot ETF state of affairs is essentially completely different. He asserts, “A BlackRock ETF fundamentally changes access to Bitcoin. It will have a huge (positive) impact.” His view is that the ETF will introduce BTC to broader investor courses, considerably altering the funding panorama.
Drawing a parallel with the historical past of gold ETFs, Morehead means that Bitcoin ETFs may equally revolutionize Bitcoin funding, increasing its enchantment and legitimacy. He predicts a considerable shift within the demand dynamics for Bitcoin, akin to how gold ETFs altered the gold market.
In his concluding remarks, Morehead revisits the preliminary query in regards to the ETF launch being a “sell the news” occasion. He argues, “Buy the rumor, buy the news.” This phrase encapsulates his perception that, in contrast to previous occasions, the introduction of a Bitcoin ETF won’t result in a sell-off however will mark the start of a brand new period in Bitcoin funding.
At press time, BTC traded at $37,341.
Featured picture from Shutterstock, chart from TradingView.com