People are talking about the so-awaited Bitcoin exchange-traded fund (ETF) for quite a lot of time. However, according to Tom Lee, the co-founder of Fundstrat, Bitcoin is not liquid at the moment, so there is simply no way the ETF could be successfully created.
Lee argues that the price of BTC would need to be at least $150,000 USD for the market to have enough liquidity. Only this would make the ETF possible. This is basically the main reason why we’ll not have the ETF this year. With a market under $200 billion USD, the market is not very liquid at the moment.
The ETF would basically create what Tom Lee describes as a major demand imbalance. This could turn the whole idea into something unfeasible. Also, the U. S. Securities and Exchange Commission (SEC) will probably not want to have its image linked to the dangerous project, which is why it generally just postpones it.
Only after Bitcoin would not be so small anymore that it would be the kind of asset that generally can have an ETF. It is because of this that people, in Lee’s opinion, should be tempering their expectations a bit.
He affirmed that the gold ETF was only approved in 2003 and gold is a very old asset. These developments simply don’t happen overnight, which is why it is important to be very patient and realistic when dealing with them.
If we take what Tom Lee is saying as the truth, Bitcoin would have to really jump in price for the ETF to happen anytime soon. These days, traders are still optimistic, but many of them are believing that prices will increase tenfold this year, though, so it may take a while.
"Bitcoin's price needs to be $150K to be liquid enough to handle what would be expected from an ETF." – @fundstrat on why a bitcoin ETF is still years away.
— BLOCKTV (@BLOCKTVnews) October 22, 2019