Charts: How an ETF Approval Could Impact Bitcoin's Price

[alyssa85]

http://www.coindesk.com/charts-etf-approval-impact-bitcoins-price/

This infographic of bitcoin's price is something I've been pondering today.

It tells bitcoin's often dramatic price story in fundamental trend lines that abstract away some serious doses of speculative activity.


There's a lot in this chart, so lets break it down:

    In late 2015 through to May 2016, we saw a three cats and a moon consolidation pattern play out over six months after a multi-level marketing (MMM) pyramid scheme took bitcoin price action through some exciting times.
    By early June 2016, we saw a speculative bubble (marked in green above) as the market sought to price in the upcoming block reward halving event. This was to be the second halving event, slashing payout and therefore the supply of new bitcoins from 25 BTC every 10 minutes to… well, exactly half to 12.5 BTC.
    Leading up to this, many people were afraid miners would exit (taking their protective hashing power with them), and that the block processing would slow and the price could crash. This did not happen. What happened was simply that the markets saw less sell-side pressure from miners who had fewer newly minted coins to sell. (The blue trend shows the steeper rate of price appreciation this had on the markets.)
    Finally, what we may be seeing from Q4 2016 to present is the market undergoing a much larger and longer speculative phase for the upcoming bitcoin ETF decision. If approved, hundreds of millions at a minimum are expected to be poured into bitcoin. Understandably, the blue-shaded area in our infographic would then be drawn out.

There is a lot more in this article - I highly recommend people click and read it.

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[d5000]

The interesting number of this article for this sub-forum is that the author predicts a $190 price increase if there are $300 million (as expected by some experts) flowing into Bitcoin because of the ETF.

I think that $1090 could well be the "end price" after the resulting speculative bubble and the following correction. But if the ETF gets approved I think the Bitcoin price will skyrocket at least to $1400-500, possibly even $2000, because of the euphoria it would cause in the Bitcoin community. We've had bubbles with much, much weaker fundamental reasons (e.g. the 2013 "Cyprus" bubble) and much higher tops.

And people would forget for a moment the actual fundamental problems Bitcoin has (transaction capacity). These could cause a hard crash when shorters see an opportunity in launching a spam attack to the blockchain with possibly up to a mempool of 1 million unconfirmed transactions.

[Wind_FURY]

This made me laugh reading it.

Current market speculation

Needham and Company published a report early this year estimating that an ETF approval was likely below 25%. However, at the time of writing, the newly released BitMex EFT prediction market is expecting a 33% chance. We've seen speculative bitcoin pricing in the range of $1,050-$1,150 and success probabilities of 25% to 33%, figures that are in line with a $500m-$1bn capital injection from ETFs. In such a scenario, we would see bitcoin's market cap swell to $20bn-28bn.

I hope and wish Needham and Company really know what they are talking about and getting into. They should visit this forum more and see what is really happening with Bitcoin. We had spammers attacking the network causing more than 50,000 unconfirmed transactions twice this week and more the past few weeks. We have scalability problems and more problems on how to solve it. We have an experimental payment system with Bitcoin but the people outside of it treats it like digital gold. So amusing.

[alyssa85]

This made me laugh reading it.

Current market speculation

Needham and Company published a report early this year estimating that an ETF approval was likely below 25%. However, at the time of writing, the newly released BitMex EFT prediction market is expecting a 33% chance. We've seen speculative bitcoin pricing in the range of $1,050-$1,150 and success probabilities of 25% to 33%, figures that are in line with a $500m-$1bn capital injection from ETFs. In such a scenario, we would see bitcoin's market cap swell to $20bn-28bn.

I hope and wish Needham and Company really know what they are talking about and getting into. They should visit this forum more and see what is really happening with Bitcoin. We had spammers attacking the network causing more than 50,000 unconfirmed transactions twice this week and more the past few weeks. We have scalability problems and more problems on how to solve it. We have an experimental payment system with Bitcoin but the people outside of it treats it like digital gold. So amusing.

Very true. In some ways, the ETF might expose Bitcoin's problems to the mainstream media and cause irreparable harm.

[_nur]

I think maybe ETC ETF will come first

[cpfreeplz]

$300million added to the current value would be a small single digit increase. But the price will go much higher, more like 30% then there will be a huge correction. This is only assuming the ETF takes off of course.

[pooya87]

the amount it is predicting price will rise because of possible ETF approval is too small in my opinion. at this point the approval can potentially be one of those big good news that creates a huge hype and then leads to a  rally.

[coinplus]

the amount it is predicting price will rise because of possible ETF approval is too small in my opinion. at this point the approval can potentially be one of those big good news that creates a huge hype and then leads to a  rally.

It maybe completely dependent on how much investments etf is going to attract. But those figures will be possible only after the approval of etf. But usually market will react based on the potential of one news/event. Hence etf may bring unlimited investments into bitcoins so I guess we cannot speculate the future prices that much accurate.

[rjclarke2000]

I really can't see the ETF happening. Just my opinion and can't really back this up with anything.


It just doesn't seem like the right time. I'm usually bullish but I expect a large drop come March the 11th when everyone realises it's not happening.

Too much hype on this.

Edit.

Winkle lawyer says ETF unlikely. Well that says it all to me.
I hope I am wrong.

[panju1]

$300million added to the current value would be a small single digit increase. But the price will go much higher, more like 30% then there will be a huge correction. This is only assuming the ETF takes off of course.

$300Mn inflow into bitcoin won't result in a $300Mn increase in market cap/value.
When an ETF decides to buy $300Mn worth of bitcoins, due to lack of adequate market depth, the price could shoot up. This would result in the market cap going up by billions of dollars.

[BTCLovingDude]

$300million added to the current value would be a small single digit increase. But the price will go much higher, more like 30% then there will be a huge correction. This is only assuming the ETF takes off of course.

$300Mn inflow into bitcoin won't result in a $300Mn increase in market cap/value.
When an ETF decides to buy $300Mn worth of bitcoins, due to lack of adequate market depth, the price could shoot up. This would result in the market cap going up by billions of dollars.

i seriously doubt the $300mil will be injected in one day and on exchanges into bitcoin! that is a stupid move and causes them to be forced to buy high priced bitcoin.
any wise person would inject it slowly and through different channels that doesn't even affect the flow of things on exchanges and price wouldn't feel it.

but rising because of the news and also because of the ETF itself in the long term is another story.

[LLec]

I think maybe ETC ETF will come first

A ethereum etf? Now that hasn't been mentioned as of yet. But that might be a viable option for those not to sure about how the ETF for bitcoin might unfold and those that are on the fence about it.
I am not a holder of it yet but might consider doing so if this ETF was available before the announcement because official for the bitcoin one first.

[Kprawn]

The conspiracy theorist seem to think the SEC is stalling this on purpose, because they want to give the Fiat financial system a last life line, to

see if they can come out of this deep hole they have dug for themselves. Did the SEC stop the reckless banking practices in the past? Nope.. they

did not, and everything nearly collapsed.... but the governments came in with the massive bailouts and they survived. They will support corrupt

banking systems... and Bitcoin will have to take the back seat. 

[alyssa85]

Here is another article about the ETF:

http://www.forbes.com/sites/laurashin/2017/02/10/after-bitcoin-dropped-10-how-likely-is-an-etf-now/

They think the events in China (removing margin lending, enforcing fee trading, insisting on KYCs and AML compliance) are marginally positive for the ETF.

Potential hardfork in bitcoin to deal with block size is negative

And Trump administration priorities are negative for the ETF.

[Wind_FURY]

This made me laugh reading it.

Current market speculation

Needham and Company published a report early this year estimating that an ETF approval was likely below 25%. However, at the time of writing, the newly released BitMex EFT prediction market is expecting a 33% chance. We've seen speculative bitcoin pricing in the range of $1,050-$1,150 and success probabilities of 25% to 33%, figures that are in line with a $500m-$1bn capital injection from ETFs. In such a scenario, we would see bitcoin's market cap swell to $20bn-28bn.

I hope and wish Needham and Company really know what they are talking about and getting into. They should visit this forum more and see what is really happening with Bitcoin. We had spammers attacking the network causing more than 50,000 unconfirmed transactions twice this week and more the past few weeks. We have scalability problems and more problems on how to solve it. We have an experimental payment system with Bitcoin but the people outside of it treats it like digital gold. So amusing.

Very true. In some ways, the ETF might expose Bitcoin's problems to the mainstream media and cause irreparable harm.

I do not think it will cause irreparable harm but Bitcoin ETF investors will be very disappointed. They will have a reality check and find out the flaws in BTC.

The motivation behind this is clearly greed. There are still a lot of people from the finance sector that think riding the Bitcoin bandwagon is still profitable.

[600watt]

$300million added to the current value would be a small single digit increase. But the price will go much higher, more like 30% then there will be a huge correction. This is only assuming the ETF takes off of course.

$300Mn inflow into bitcoin won't result in a $300Mn increase in market cap/value.
When an ETF decides to buy $300Mn worth of bitcoins, due to lack of adequate market depth, the price could shoot up. This would result in the market cap going up by billions of dollars.

you both got it wrong.

if $300 million buy bitcoin within a few days it would raise the price way more than single digit. currently it needs $400k to raise the price $20 on bitstamp. multiply that by 10 for the ten biggest exchanges (=$4 mio) and the price would rise $20 on 10 biggest exchanges.

$40 mio injection would equal a $200 rise
$400 mio injection would equal a $2000 rise.


after a $2000 rise btc would be at a $3000 level. if one btc is traded at $3000 the current market cap would equal approx. 48 billion.

that is only considering the ten biggest exchanges. i am not sure how many exchanges are needed to really raise the price. my guess is that they would just follow.

[deisik]

http://www.coindesk.com/charts-etf-approval-impact-bitcoins-price/

This infographic of bitcoin's price is something I've been pondering today
~snipped~

There is a lot more in this article - I highly recommend people click and read it

This is a conspicuous example of wishful thinking (aka motivational bias)

While I certainly agree that the price spike in June 2016 was due to the halving hype and hysteria, the recent price surge has most certainly nothing to do with ETF approval expectations. The latter is no more than the article author's wishful thinking. As to me, this price growth is actually caused by the halving itself taking effect, which can be seen by the change in the angle of slope (though it is likely no more than an optical illusion too), as well as heavy price manipulation by the Chinese (or whatever) manipulors

[Pab]

I really can't see the ETF happening. Just my opinion and can't really back this up with anything.


It just doesn't seem like the right time. I'm usually bullish but I expect a large drop come March the 11th when everyone realises it's not happening.

Too much hype on this.

Edit.

Winkle lawyer says ETF unlikely. Well that says it all to me.
I hope I am wrong.

I also think bitcoin EFT fund has very small chance to be approved and will be correct.USA is not enough open for changes,that kind of fund may find support in Swizerland, country what is very much open for bitcoin

[error08]

$300million added to the current value would be a small single digit increase. But the price will go much higher, more like 30% then there will be a huge correction. This is only assuming the ETF takes off of course.

$300Mn inflow into bitcoin won't result in a $300Mn increase in market cap/value.
When an ETF decides to buy $300Mn worth of bitcoins, due to lack of adequate market depth, the price could shoot up. This would result in the market cap going up by billions of dollars.

you both got it wrong.

if $300 million buy bitcoin within a few days it would raise the price way more than single digit. currently it needs $400k to raise the price $20 on bitstamp. multiply that by 10 for the ten biggest exchanges (=$4 mio) and the price would rise $20 on 10 biggest exchanges.

$40 mio injection would equal a $200 rise
$400 mio injection would equal a $2000 rise.


after a $2000 rise btc would be at a $3000 level. if one btc is traded at $3000 the current market cap would equal approx. 48 billion.

that is only considering the ten biggest exchanges. i am not sure how many exchanges are needed to really raise the price. my guess is that they would just follow.

Nice calculations, I just realize that it needs $400k to rise the price $20, if Bitcoin ETF get approval, we know what will happen when $300 million to enter the market.
Many investors may come and join in bitcoin investment, to store their wealth, but we know that ETF approval probabilities may less than 33% or 25%, so I do not expect it's going to be happen.

[Biodom]

Nice calculations, I just realize that it needs $400k to rise the price $20, if Bitcoin ETF get approval, we know what will happen when $300 million to enter the market.
Many investors may come and join in bitcoin investment, to store their wealth, but we know that ETF approval probabilities may less than 33% or 25%, so I do not expect it's going to be happen.

actually, chances for ETF approval doubled from 20% to 41.3% in the last six days:
https://www.bitmex.com/app/contract/COIN_BH17
looks like NE Patriots surge, I hope