According to Jim Bianco, president of Bianco Research and Bloomberg columnist, the newly launched exchange-traded funds (ETFs) that invest directly in Bitcoin (BTC) are a giant mistake.
The Wall Street veteran highlighted the pitfalls of the shiny new products, stressing the potential effects spot market Bitcoin ETFs could have on the progress of the largest and oldest cryptocurrency.
Why BTC ETFs Could Be Bad For Crypto
The U.S. Securities and Exchange Commission’s decision to approve spot Bitcoin exchange-traded funds brought in a new wave of investors who had previously kept crypto assets at arm’s length. However, despite the roaring success of these ETFs, president and macro strategist at Bianco Research, Jim Bianco, believes launching these new offerings was a “giant mistake”.
During a recent talk with Bitcoin podcaster Natalie Brunell, Bianco admitted that the newly approved spot Bitcoin ETFs will likely catapult the price of Bitcoin to as high as $60,000. “Everybody, you’re gonna get $60,000 per Bitcoin, congratulations,” he opined. However, he is convinced that Bitcoin will never hit the coveted $1 million mark.
"I think the spot #Bitcoin ETF is a giant mistake…yes it will produce higher prices…but you're not getting to $1 million. It's an admission of failure…you're sucking crypto into the current system." –@biancoresearch
— Natalie Brunell
Thoughts?
Full interview: https://t.co/WFIney77Pl
I… pic.twitter.com/SWElNXN9KH(@natbrunell) February 18, 2024
Bianco noted the absence of decentralization and immutability in the spot BTC-based ETFs, voicing concerns that they could become ensnared in the centralized system. According to him, if the ETFs get “sucked into the centralized system,” it would grossly undermine BTC’s founding principles as a decentralized digital currency, not controlled by any single entity.
“Relying on the spot BTC ETF is putting all of BTC at risk from the same centralized leviathan it is trying to get away from,” the former Wall Street analyst posited.
Although packaging BTC into a regulated financial product traded on U.S. stock exchanges is a boon for short-term prices, there are apprehensions that ETFs concentrate ownership to a handful of asset managers (BlackRock, Fidelity, etc.) instead of a network of widely distributed users.
Bianco indicated that many years back, the same mistake was made with gold. The precious metal was supposed to become an alternative to the legacy financial system, but then spot and futures ETFs were introduced, and it never happened.
Bianco Cautions Of SEC’s Control Over BTC ETFs
The SEC had denied spot Bitcoin ETFs for the last decade before finally greenlighting them in mid-January in a landmark event for the $2.08 trillion crypto industry.
The spot ETFs have been a tremendous success as investors previously unable to get exposure to BTC in a safe and regulated manner flock to the sector. Last week, BlackRock, the world’s largest asset manager, experienced the biggest inflows, with its iShares Bitcoin Trust amassing over $1.6 billion from Feb. 12–16.
Bianco said during the interview that these products are bought via regulated brokerages and listed on the New York Stock Exchange, which gives SEC Chairman Gary Gensler a chance to impose numerous rules and regulations on them. He believes that if spot ETFs grow dramatically, it will force regulated brokerages and ETF issuers to follow the set rules rigorously.
The macro strategist further predicted that the market would still be undervalued even if these investment vehicles drive the price of Bitcoin to new historic highs.
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