Could crypto investors be underestimating the impact of a U.S. spot bitcoin ETF approval?
Our next guest says the market is severely underestimating the impact of a US bought Bitcoin ETF joining us. Now to discuss the crypto markets is K 33 senior analyst Veel Lund. Welcome Veel. Thank you a pleasure to be back. Glad to see you again. So why do you think the the the market is, is, is putting lower odds on the spot uh ETF approval um compared to what you think it is. I I, you know what, what's the difference and why essentially I don't think that the market is putting lower odds on an approval, but I think that the market overemphasizes short term news and have a very short sighted focus on the most recent headlines. For instance, today we talk about macro while Bitcoin's correlation to the NASDAQ and the DXY is at most comparable to PRE COVID. And I'll also talk about the FDX Bankruptcy estate. So the market has a tendency to focus on the recent events and forget about the big launches that has been announced prior. So I think it's just the fact of the market forgetting that uh there there are very solid fundamentals ahead and that uh Yeah. Yeah. So, so you see that the potential I, you know, when you talk about that is that uh a 66% chan uh a 66% rally potentially happening in Bitcoin going up to $42,000. That's incredible. Take a look at the chart that you, you've given us here. Uh Can you explain uh explain what's going on in that chart? Yeah. So um this, this chart is based on uh uh multiple data sets uh that are uh looking into the previous uh impact on the market that flow into Bitcoin investment vehicles have had. And from those uh charts, we have previous system that uh throughout 2020 up until 2023 Bitcoin tended to yield at 23.5% return when ETP inflows uh was higher than 20,000 BT C. Uh So, we have identified a positive price relationship between inflows to Bitcoin exchange traded vehicles and the Bitcoin price. Um This is due to uh supply, being absorbed in the spot market and being pulled into investment vehicles uh which has deep and uh immediate uh effects on liquidity and in a market where um the, the general activity in the market is quite low. Uh The the of the needle is uh on the net buyer and the net seller. And in an event with a MD F approval, the net buyer will um be able to contribute quite dramatically to if the market is our base view. I want to move now to another chart that you sent through to us. This is from K 33 research. It highlights Bitcoin's rolling 30 day return and rolling 30 day flows into Bitcoin investment vehicles. Uh Talk to us a little bit about what we're seeing here. Yeah. So essentially this is one of the components that uh we used to generate the previous chart. And you here see the Bitcoin rolling 30 day uh returns versus the Bitcoin inflows or outflows to investment vehicles over a 30 day horizon. And it's quite clear here that it is a relationship between inflows to exchange traded vehicles or investment vehicles and the, the Bitcoin prices. And likewise for outflows uh flows tends to dictate the general movement of the market. And that's like the core reason why we are really very bullish on the ETF prospects and think that this is a very constructive development for the market. And also why I hyperbolically stated that the market was wrong and that current prices are very good for investors seeking to build long term exposure in Bitcoin. So let's talk about short term though. Uh your favorite uh where where do you see it? You know, as we go into this now, um the, the potential, at least that uh we, we might have high interest rates or higher interest rates even. Uh We, we're seeing that in Europe, we might even get that in the United States sometime before the end of the year. Uh What does that mean? Ultimately for Bitcoin over the next several months, do you see, do you have any support and levels that you see happening uh given, given the the current environment? Yeah, so, so Glenn was on there yesterday and he had some uh quite robust uh support and resistance lines that have been very relevant for the last six months. 57,000 are areas worth focusing on. Uh but it's not really that much that have happened in the last six months, whereas uh to touch on this with Macro. Um so as I touched upon earlier today, um the DXIY correlation is uh very low. Uh Bitcoin is currently not showing any real signs of uh uh like reacting properly to big Big Mac headlines or, or um uh not in the extent that it did previously. And uh uh interest rate uh effects on Bitcoin is quite challenging to assess uh as uh things is, things are right now. Uh because you have this very odd uh impact from Tedder, which um I have publicly stated that they aim to allocate 15% of their net operating profits to uh Bitcoin allocations. So, in that regard, higher interest rates create an environment where at least one big buyer will acquire more Bitcoin because they earn more cash on their treasury notes. All right, we're gonna have to leave it there. Veel. Thanks so much for joining the show again. It was a pleasure seeing you this morning. Thank you. I'm glad to be on. That was K 33 senior analyst Veil.