At the time of writing, the price of Bitcoin is $34,268. Just last week it was around $27,000. So, that's really some increase right there!

Others might have some other reasons for the increase, but, as I wrote here some days back, the increase is because of the whole Bitcoin Spot ETF hype. Especially because of the error tweet Cointelegraph made on the 16th of this month.

The error tweet said that the USA Securities and Exchange Commission (SEC) had approved BlackRock's Spot ETF application. And then in 1 hour, Cointelegraph took down the tweet and apologized for the error, as there hadn't been any such approval.

Meanwhile, in that one hour that the fake news persisted, the price of Bitcoin went from around $27,000 to around $29,000! In just that 1 hour.

This showed everybody what can happen if a true announcement of the ETF approval is made. This also made people who weren't paying attention before pay attention to what the ETF application was about.

And it made those who didn't know much about it research more about it and they got to find out how huge it can be. All of these surely made people start buying more, and that's the reason for the price surge, if you ask me.

A real hype is actually underway about the entire thing, and people are expecting a huge bull run, more huge than we've ever seen, if the ETF applications are approved by the SEC.

But in this post, I'm going to be playing Devil's Advocate. Which means, I'm going to be raising very logical doubts about this whole ETF thing. First of all, let's start with why an ETF approval is such a big deal and why it's generating all this hype.

Why An ETF Approval is Such a Big Hype

For those who don't know what is meant by the words "Bitcoin Spot ETF", I explained it simply and in some detail here.

But in a few words, it is simply making Bitcoins available on the Stock Market, in a way people can buy Bitcoin on the Stock Market without having to create a wallet and be distracted by all the security required to have and store Bitcoin.

This is a big deal because this opens Bitcoin up for the traditional market. Before Bitcoin was created, millions of people already traded on the Stock Market. But when Bitcoin came into the scene it could only be bought on Crypto exchanges or peer-to-peer.

This can be a hassle for the majority of traders on the Stock Market who have to start learning about wallets and cryptocurrencies. So with bringing crypto down to their level on the Stock Market which they're already used to, it opens the door for them to invest in Bitcoin. Which would clearly increase the Market Capitalization and price.

Some Specific Major Reasons for the High Expectations

In order for Bitcoins to be available on the Stock Market, a licensed ETF provider has to provide it on the Stock Market, and the biggest names in ETF provision in America have applied to provide them.

Names like BlackRock, which currently manages $9.42 Trillion, Invesco & Galaxy Digital (over $1 Trillion in asset management), WisdomTree ($87 Billion in assets), and many more!

With names like these, and funds like these, many are expecting some percentage of that money to be used for Bitcoin Purchases if the ETFs are approved. And this is one of the main reasons people are crazy about the ETF approval.

The next reason is that traders on the Stock Market would be able to purchase Bitcoin too. But I'm going to show you logical reasons why this might not bring much capital to Bitcoin and Crypto but only bring hype.

Why These Would Most Likely Not Bring Much Capital But Only Bring Hype

These firms applying to provide Bitcoin ETFs are seasoned trading firms. They have been in the trading industry for ages. BlackRock, for example, was founded in 1988. They surely were seasoned traders even before the firm was founded.

So, that tells you they know what hype can do to the price of an asset. They know that simply applying for a Spot ETF would cause a lot of hype and that if it gets approved the hype would be even crazier.

They know all the hype would shoot the Bitcoin price through the roof. So do you think they would the first step of applying without first stacking a gargantuan bag of Bitcoin?

And if they have already stacked a massive bag, that clearly tells you that not a single penny of their money would go into Bitcoin anymore because it has already gone into it.

Did you get that?

It means, at this point, these guys have most likely already bought all the Bitcoin required for this ETF to run properly, should it get approved. So there wouldn't be any further buying in the near future, which means not even 1 cent of all the funds you see in their possession would get into Bitcoin again.

In order for an ETF to run, once a purchase is made on the Stock Market, the ETF provider is supposed to buy the actual Bitcoin and store it on behalf of the person making the purchase.

But if they already have a fat bag of Bitcoin, they wouldn't have to buy from the market, they can simply take from the bag.

Conclusion

So, there you have it. If this is the case, as it logically looks like it is, then we don't have any reason to expect any of those managed funds to come into the Crypto Market.

But, there's no need to be sad or reduce expectations much, because the hype alone would bring in a lot of funds from those expecting the funds from these firms and future Stock Market buyers.

And from what I've explained so far, the hype is already bringing in these funds and causing the current increase. So, cheers to one and all.

[Cover Image from Pixabay]