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VanEck’s Bitcoin Prediction Stands At $10K-$12K By Q1 2023

VanEck is one of a handful of companies that continues to fight for the approval of a Bitcoin Spot ETF. The U.S. investment management firm received a resounding rejection from the U.S. Securities and Exchange Commission in November 2021 after a three-year battle.

Just six months later, on June 24 of this year, VanEck reapplied for approval of a physically-backed Bitcoin ETF all over again. The SEC’s decision is currently pending.

Despite this support, the investment firm has made a bearish prediction for BTC into the first quarter of 2023. Matthew Sigel, head of digital asset research at VanEck, shared this assessment in a recent media presentation.

BTC Price Could Drop To $10,000

“Looking ahead, Bitcoin could test $10,000-$12,000 as Bitcoin miner bankruptcies increase due to the drop in Bitcoin value and increasing electricity costs,” VanEck predicts.

The investment firm believes that many miners will be forced to restructure or merge in order to find capital during difficult times. As Siegel explained, the mining industry is in a tremendous stress situation.

We have an index which tracks the publicly traded companies in this sector; the median market cap is now below $200 million, and every one of these companies is burning cash, trading well below book value.

In recent months, BTC has traded like a risk asset, Siegel said. What is surprising to the company, however, is its sensitivity to higher interest rates.

VanEck sees one reason for this in policy responses to inflation in developed countries, which have capped energy prices and expanded sanctions against Russia. This has been a difficult proposition for Bitcoin mining, Sigel elaborated.

Still, VanEck is optimistic that the BTC price could rebound to $30,000 in the second half of 2023 as inflation declines. Looking further, the investment firm points to the halving in 2024, an event that traditionally drives up BTC’s value.

Bitcoin Miner Capitulation In Full Swing

As NewsBTC reported, the second Bitcoin miner capitulation within one cycle has already started two weeks ago. Charles Edwards of Capriole Investments reported on November 28 that the hash ribbons had confirmed the start of the capitulation.

Glassnode’s latest “Bitcoin miner net position change” data shows that miners have sold aggressively in the last two weeks, to an extent that historically has only been higher in early 2021.

Bitcoin miner net position

Historically, miner capitulation has lasted an average of 48 days, so an end to the selling pressure could be foreseeable by mid-January 2023. However, this is not in line with VanEck’s Bitcoin prediction, which foresees a longer bear market.

Despite the fact that miners have clearly given up their BTC holdings in the last week, the interesting thing about this currently is that the price of BTC is showing an upward trend.

Bitcoin BTC USD_2022-12-14

At press time, BTC was trading at $17,882, with today’s FOMC meeting starting at 14:30 ET very likely to have a significant impact on price action in the coming weeks.

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Grayscale Met With The SEC, Tried To Convince Them To Turn The GBTC Into An ETF

Will GBTC get to become the first US-based spot bitcoin ETF? It doesn’t look that way. The euphoria from six months ago turned into Grayscale hinting that it might sue the SEC if its request is denied. Currently, the climate dictates that the answer will probably be negative, but the company is not giving up. According to CNBC, Grayscale “met privately with the Securities and Exchange Commission last week in an effort to persuade the regulator to approve the conversion of its flagship fund into an ETF.”

Related Reading | Grayscale Removes Bancor (BNT) And Universal Market Access (UMA) From Its DeFi Fund

The Grayscale Bitcoin Trust, also known as GBTC, “holds roughly 3.4% of the world’s bitcoin and is owned by more than 850,000 U.S. accounts, according to Grayscale.” For more than a year it has traded at around a 25% discount to BTC’s price. According to the firm, at the moment that the SEC approves the product’s transformation into an ETF, the discount will end and it will unlock “up to $8 billion in value for investors.”

Take into account that VanEck’s, BlockFi’s, and other recent applications for a spot bitcoin ETF have been rejected. And that Grayscale has been applying to get one since 2017. This time around, the SEC has until July 6th to approve or deny the GBTC application.

What Would Happen If The GBTC Turns Into An ETF

To answer this question, Grayscale made “a 24-page presentation” for the SEC. Some graphs from the document are in the CNBC report, although in low resolution. In general, the GBTC’s transformation into a spot bitcoin ETF “would open them up to ordinary investors in a familiar wrapper that trades like a stock.” 

The main argument from Grayscale is that a bitcoin futures ETF already exists, and the “SEC is discriminating against issuers” by not letting any company create a spot bitcoin ETF. “Grayscale contended that a spot bitcoin ETF is “no riskier” than futures-based ETFs, because the two markets are both affected by the underlying price of bitcoin and track each other closely,” said CNBC.

Back in April Grayscale’s CEO, Michael Sonnenshein, felt more litigious when he said:

“If the SEC can’t look at two like issues, the futures ETF and the spot ETF, through the same lens, then it is, in fact, potentially grounds for an Administrative Procedure Act violation.”

The SEC visit and the threat of legal action have not been Grayscale’s only weapon. According to CNBC, to help transform the GBTC into an ETF, “the investment firm has helped coordinate a public letter-writing push, flooding the SEC with more than 3,000 letters in support of its application.”

GBTC price chart on FTX | Source: GBTC/USD on TradingView.com
How Would A Spot Bitcoin ETF Affect The Market?

Opinions vary. There are institutions that can’t invest in bitcoin as an asset, but could definitely put their money in an ETF. Some believe that the sudden influx of funds that these people would bring would send bitcoin’s price to the moon. Unlike a future ETF which only holds future contracts, a spot ETF would have to buy the bitcoin it’ll represent. So, the money would definitely enter the bitcoin ecosystem.

Related Reading | SEC, Ripple Agree To Extend Legal Battle Until 2023; XRP Bears The Brunt Of Case

On the other hand, Bitcoiners don’t see what they deem as “paper bitcoin” with good eyes. The financial instrument would represent bitcoin, but the ETF isn’t the asset per se. This puts investors at risk and brings forth certain vulnerabilities to the bitcoin network. The “paper bitcoin” could be considered inflation and something akin to fractional reserve banking is technically possible.

In any case, neither group has the finger on the trigger. The SEC and only the SEC does.

Featured Image by Aymanejed on Pixabay | Charts by TradingView

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BlockFi Filed For The Coveted Spot Bitcoin ETF With The SEC

Will BlockFi be the one? The rumors are flying, apparently, the U.S. Securities and Exchange Commission will approve a spot Bitcoin ETF soon. With that in mind, the news that crypto lending platform and investment service BlockFi just filed to get one approved was met with suspicion and excitement by the Bitcoin community. Unlike the Bitcoin Futures ETF, a spot one will require the company sponsoring it to buy a huge amount of Bitcoin. This will definitely affect the price. However… BlockFi?

Related Reading | Bitcoin Futures ETF Exceeds Expectations, Trades $1 Billion On Day One

Last year, hackers targeted BlockFi and stole sensitive user data including their clients’ activity history. To add insult to injury, the hackers used a simple SIM swap to breach their security, and the company didn’t disclose the hack until days after it happened. More recently, regulators from five states accused the controversial lending platform of violating security laws with their BlockFi Interest Account product. In a statement regarding the issue, the company said:

“BlockFi’s BIAs have been the subject of recent activity by securities regulators in New Jersey, Texas, Alabama, Vermont and Kentucky, and we are in active dialogue with these regulators. We believe that our products and services are lawful and appropriate for crypto market participants, and we remain steadfast in our commitment to protect consumers’ rights to earn interest on their crypto assets.”

In any case, past performance doesn’t guarantee future results. And BlockFi could score big if they’re the chosen one. The first spot Bitcoin ETF is expected to shatter all kinds of records, but let’s not get ahead of ourselves.

BTC price chart for 11/09/2021 on Oanda | Source: BTC/USD on TradingView.com
What Do We Know About BlockFi’s Version Of A Bitcoin ETF?

Not much, actually. The project is a joint venture with investment management firm Neuberger Berman. If approved, it will trade on the New York Stock Exchange. It will “reflect the performance of bitcoins held by the Trust, less the Trust’s expenses and other liabilities.” Yes, the registration statement actually says “bitcoins,” but let’s give them a pass for now. What else does the document reveal? Well…

“Barring a liquidation or extraordinary circumstances, the Trust will not purchase or sell bitcoin directly, although the Trust may direct the Custodian to sell bitcoin to pay certain expenses. Instead, when the Trust sells or redeems its Shares, it will do so in “in-kind” transactions in blocks of [] Shares (a “Creation Basket”) based on the quantity of bitcoin attributable to each Share (…). Because the creation and redemption of Creation Baskets will be effected in in-kind transactions based on the quantity of bitcoin attributable to each Share, the quantity of bitcoin in Creation Baskets so created or redeemed will generally not be affected by fluctuations in the value of bitcoin.”

In any case, is not even close to guaranteed that  BlockFi will win the coveted first spot. The amount of ETF fillings regarding Bitcoin is getting ridiculous, actually.

Who’s Next On The SEC’s Bitcoin ETF List?

The list Bloomberg Intelligence’s James Seyffart provides shows 21 hopeful spot Bitcoin ETFs and even more derivatives-based ones. That includes the BlockFi Futures ETF that the company filed for last month. Here’s the list.

Here's the current list of #Bitcoin and Crypto ETF filings with the SEC. Next big date is still 11/14/21 for VanEck's spot Bitcoin ETF. It will be either approval or denial from SEC — no more delays. https://t.co/Z8phpVlsOK pic.twitter.com/g9ayoibmQN

— James Seyffart (@JSeyff) November 8, 2021

According to the expert, the “Next big date is still 11/14/21 for VanEck’s spot Bitcoin ETF. It will be either approval or denial from SEC — no more delays.” Will VanEck be the chosen one? We’ll have to wait and see, but Seyffart feels it won’t be. He tweeted, “We fully expect a denial based on recent comments from SEC/Gensler. Would be shocked if VanEck’s filing is approved (despite believing it *should* be approved). BUT, the denial letter should give us insight into SEC’s current views/opinions.”

Related Reading | Bitcoin ETF Inflows Slow Down As Altcoins Interest Rebound

Chances are all the approved spot Bitcoin ETFs will make tons of fiat money, but the first-mover advantage in a product as anticipated as this one is worth millions of Dollars. Billions, even.

Featured Image by Chris Stermitz from Pixabay – Charts by TradingView