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Bitcoin At $45,000 Is Mispriced, Will Race For ETF Fees Push Prices To Record Highs?

Started by Bitcoin, Jan 03, 2024, 06:22 am

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Bitcoin

Bitcoin At $45,000 Is Mispriced, Will Race For ETF Fees Push Prices To Record Highs?

Most analysts are optimistic that the impending launch of spot Bitcoin exchange-traded funds (ETFs) in the U.S. could propel the coin to new heights, way above the $69,000 mark registered in November 2021.


Andrew Kang, co-founder of Mechanism Capital, believes that Bitcoin at $45,000 is still grossly undervalued. This is given the anticipated influx of institutional investment from ETFs, and the effort issuers will put into marketing their products as they aim to accrue billions in fees in the months ahead.


Learning From Gold And Quest For Fees


Kang points to gold ETFs, which hold over $120 billion in assets under management (AUM) and generate an estimated $720 million in annual fees for their issuers. ETF issuers will charge a management fee to cover the costs associated with operating the ETF, including custody of coins and trading. Additionally, a fee will be charged through the bid-ask spread whenever Bitcoin is traded.



When trading and management fees are stacked, Bitcoin issuers could generate billions of dollars yearly, especially if trading volume is high. By Kang’s estimation, Bitcoin ETF issuers might generate between $10-20 billion in annual fees.


However, this is subject to dominance. After the Securities and Exchange Commission (SEC) approves multiple spot ETFs, issuers, including BlackRock and Fidelity, are expected to wage an aggressive battle for market share. 


The goal for issuers is not only to ensure that funds spent on advertising yield, but for every dollar spent, more is generated into the future. This is critical because investors are less likely to switch once they choose an ETF, making early dominance crucial for long-term revenue generation.


Is Bitcoin Ready For A 10X?


According to observers, issuers will promote Bitcoin at every opportunity. This is why ChainlinkGod while responding to Kang’s post on X, thinks Bitcoin will also likely track 10X in the sessions ahead since all issuers are “inherently long” on Bitcoin.



Looking at price charts, Bitcoin continues to edge higher, recently rising to as high as $45,800, according to price data. At this pace, BTC bulls extended gains of 2023. This will be as the community expects the SEC to approve the first Bitcoin ETFs. Even so, it is unclear when the agency will greenlight this product immediately. 


Bitcoin price trending upward on the daily chart | Source: BTCUSDT on Binance, TradingView

BTC has critical support at around the $44,000 zone, marking 2023 highs. If bulls maintain prices above this line, the odds of the coin rising to $50,000 in a buy trend continuation pattern will likely increase.


Source: Bitcoin At $45,000 Is Mispriced, Will Race For ETF Fees Push Prices To Record Highs?