The optimism of El Salvador for Bitcoin and ETFs

With the imminent approval of the Bitcoin ETF, El Salvador has recently recorded a profit of 13 million dollars from its bet on BTC. 

The president Nayib Bukele has indeed welcomed the financial increase, defining the investment as returning to positive during the past month. Let’s see all the details below. 

Approval of Bitcoin ETF: anticipated amidst El Salvador’s growing revenues

As anticipated, according to the data from Nayibtracker, El Salvador boasts unrealized profits of 12.6 million dollars from its investment in bitcoin (BTC), reversing a negative trend that had persisted for two years.

The beginning of Bitcoin purchases dates back to September 2021, with the purchase of 700 BTC at prices ranging from $47,250 to $52,670 over two weeks. President Nayib Bukele announced the return to profits last month.

The most recent purchase took place in November 2022, when the price of bitcoin was $27,780, bringing the average cost of the stock to $42,440. Currently, El Salvador holds a total of 2,798 bitcoin, with a value of $131.3 million.

The value of bitcoin is up over 75% since October, supported by the anticipation of the imminent approval of a bitcoin spot ETF in the United States. In fact, the Securities and Exchange Commission (SEC) is expected to make a decision this week.

We remind you that in 2021, El Salvador made history by becoming the first nation in the world to adopt bitcoin as legal currency.

It is hypothesized that Argentina could be the next to follow, especially after the appointment of President Javier Milei, as the country faces challenges related to hyperinflation.

Reggie Browne of GTS: Bitcoin ETFs could see premiums of up to 8%

In a recent interview with Bloomberg, Reggie Browne, Co-Global Head of ETF Trading and Sales at GTS, shared in-depth forecasts on the trading dynamics of Bitcoin spot exchange-traded funds (ETFs). 

Specifically, Browne anticipates that these ETFs will be traded at a significant premium, potentially reaching up to 8% above their net asset value (NAV).

Browne highlights a critical concern related to the NAV premium, attributing it to the limitation of US broker-dealers to internally exchange Bitcoin cash, forcing them to rely on futures for coverage. 

This complexity, according to Browne, could lead to a significant challenge within the regulatory framework imposed by the SEC.

Browne, despite the challenges, remains optimistic about the approval of spot Bitcoin ETFs and predicts significant interest from investors. Furthermore, he has anticipated inflows of at least $2 billion in the first 30 days of trading, if approved. 

His forecast suggests a potential influx of funds amounting to 10-20 billion dollars throughout the entire year, highlighting the market’s enthusiasm towards Bitcoin ETFs.

Brief focus on the price of Bitcoin

This morning, Bitcoin has maintained a level above $46,500, with a brief peak at $47,000, coinciding with an increase in interest for ETFs. The cryptocurrency has recorded an increase of about 5% in the last 24 hours. 

While most market analysts believe that the United States Securities and Exchange Commission may approve a spot Bitcoin exchange-traded fund, there are still divergent opinions.

Youwei Yang, Chief Economist of BIT Mining, expressed skepticism about the imminent approval of a spot bitcoin ETF. He predicts a delay of at least another three months by the SEC.

Yang emphasized the possibility of further delays, attributing them to issues such as the lack of clarity on manipulative behaviors in the cryptocurrency market and criminal or terrorist activities, mentioned by some members of Congress.

On the contrary, some analysts believe that the news of the approval of the ETFs has already been widely anticipated. 

Matteo Bottacini, Crypto Finance trader, stated that the majority of market participants have been well positioned for some time, thus limiting the potential for an upward movement.

Meanwhile, BlackRock (BLK) and VanEck, two of the thirteen companies aiming to launch bitcoin ETFs in the United States, have submitted updated documents on Tuesday.

These documents indicate that both companies are among the potential issuers who have received comments from the Securities and Exchange Commission in the last 24 hours.