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Kevin O’Leary Backs Bitcoin As BTC Drops Post-ETFs

Last Updated January 15, 2024 9:38 AM
Teuta Franjkovic
Last Updated January 15, 2024 9:38 AM

Key Takeaways

  • Kevin O’Leary has expressed skepticism about Bitcoin ETFs due to concerns over fees and doubts about their longevity.
  • He predicts Bitcoin’s value could rise significantly by 2030 but disagrees with extremely high valuations.
  • Institutional investors are warming up to BTC, seeing it as a store of wealth and a promising investment vehicle.

Despite the growing popularity of Bitcoin Exchange-Traded Funds (ETFs), entrepreneur and Shark Tank personality Kevin O’Leary has expressed his reservations  about investing in them.

O’Leary voiced his concerns about the fees charged by Bitcoin ETF issuers. He considers these charges unnecessary and of no benefit to him as a long-term Bitcoin investor.

Doubtful Bitcoin ETFs’ Longevity, Limited Success for Major Players

O’Leary also said he had doubts about the longevity of the 11 Bitcoin ETFs recently approved by the U.S. Securities and Exchange Commission (SEC).

He believes that only a few, particularly those supported by major industry players like Fidelity and BlackRock Inc., will succeed, attributing their potential success to their robust sales forces.

O’Leary, despite his skepticism towards Bitcoin ETFs, recognizes the significance of their regulatory approval for the cryptocurrency industry. He hopes this will pave the way for broader acceptance of digital payment systems, such as the USDC stablecoin.

While cautious about Bitcoin ETFs, O’Leary is optimistic about Bitcoin’s future value, predicting it could increase to  between $150,000 and $250,000 by 2030. However, he disagrees with Ark Invest CEO Cathie Wood‘s much more ambitious forecast of Bitcoin reaching $1.5 million by 2030, unless there is an economic catastrophe. O’Leary believes such a rapid increase in Bitcoin’s value would imply a significant downturn in the US economy.

Institutional Interest in Bitcoin Grows Despite ETFs’ Fees

However, O’Leary pointed out  institutions typically avoid ETFs because of the large fees. Still, he views the SEC’s approval of spot Bitcoin ETFs as “great news”. This is because institutional investors are favorable towards this development. According to O’Leary, this is a positive step for these institutions to gradually engage with cryptocurrency.

Earlier in the month, O’Leary expressed his anticipation of strong institutional interest in cryptocurrency, regardless of the SEC’s decisions on spot Bitcoin ETFs.

In November of the previous year, he said that all of the institutions and major organizations he had spoken with were ready to invest in Bitcoin. He emphasized their preference for Bitcoin other cryptos, citing its liquidity and growing reputation as a store of wealth and a commodity.

This perspective from O’Leary underscores the growing acceptance and interest in Bitcoin among institutional investors, marking a significant shift in the traditional investment landscape towards embracing digital assets.

Bitcoin ETFs Gain Traction Despite Concerns

The Shark Tank star also said the approval of a Bitcoin ETF  needs an exchange that fully adheres to SEC regulations. He pointed out that Coinbase, a crypto exchange listed on Nasdaq, does not meet these compliance standards because of its current legal issues with the securities regulator. Additionally, he has stated that U.S. crypto regulations are becoming increasingly stringent. In his opinion, the majority of crypto tokens hold no real value and are likely to become worthless eventually.

The launch of Bitcoin ETFs marked a milestone in the cryptocurrency market, with trading volumes on the first day totaling $4.5 billion. This figure included substantial contributions from the Grayscale Bitcoin Trust (GBTC) and BlackRock Inc., which accounted for half and a quarter of these volumes, respectively. Despite the initial success of these ETFs, O’Leary’s reservations underscore the risks and uncertainties that still surround these investment vehicles.

Bitcoin Price Falls Amidst ETFs Launch, Raise Volatility Concerns

The value of Bitcoin experienced a significant decline  recently, dropping to approximately $42,000, a nearly 10% decrease. This coincided with the commencement of trading for spot Bitcoin exchange-traded funds (ETFs) in the United States.

Before this, Bitcoin had seen an upward trend, reaching a peak of $46,000 last week and escalating to a two-year high of $49,000  when Bitcoin ETFs started trading in the US.

Bitcoin price
Credit: CoinMarketCap

However, the recent trends in Bitcoin’s performance have not aligned with the high expectations of many Bitcoin enthusiasts. Notably, the cryptocurrency did not surpass the $50,000 threshold. Also, the initial excitement surrounding the ETFs has begun to diminish, as observed by crypto research firm Swissblock .

Swissblock BTC price
Credit: Swissblock

Swissblock, in its market report, highlighted a critical question: whether the market is capable of maintaining its upward trajectory amidst these developments.

CryptoQuant , another research firm, forecasted last month that Bitcoin’s value could potentially drop to as low as $32,000 following the approval of an ETF. This prediction underscores the volatility and unpredictability of the cryptocurrency market, particularly in the context of new financial instruments like Bitcoin ETFs.

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