The looming possibility of approval for spot Bitcoin exchange-traded funds (ETFs) is generating excitement, but ARK Invest CEO, Cathie Wood, warns of potential short-term drawbacks.
Wood predicts that once securities regulators in the United States give the green light to a spot Bitcoin ETF, some investors may engage in a “sell on the news” strategy.
In an interview with Yahoo Finance on December 26, Wood expressed her belief that investors who have witnessed substantial gains may opt to cash out as a preemptive move, given the considerable anticipation leading up to the ETF approval.
She explained, “That’s an expression that traders use, so you anticipate the event, beat up the price and then sell on the news.”
Despite the short-term concerns, Wood emphasizes the promising long-term outlook.
She anticipates that the Securities and Exchange Commission (SEC) will eventually approve a spot Bitcoin ETF for institutional investors, opening an easier gateway for institutions to invest in BTC.
Wood believes that even a modest allocation of 0.1% to 0.2% of institutional assets into Bitcoin could significantly impact its price, considering its limited supply of 21 million coins.
ARK Invest, led by Cathie Wood, is one of 14 firms vying for approval of a spot Bitcoin ETF from the SEC.
Their proposed ETF, the ARK 21Shares Bitcoin ETF, is a collaborative effort with the European crypto exchange-traded product provider, 21Shares.
Wood also highlighted positive developments in the discussions with the SEC regarding spot Bitcoin ETFs.
She noted that the SEC’s approach has shifted positively, moving from silent denials to engaging in thoughtful, detailed, and technical inquiries.
This shift has fostered constructive dialogues with the regulatory body, raising optimism about the potential approval of the first spot Bitcoin ETF or multiple ETFs by January 10.
In conclusion, while the anticipation of spot Bitcoin ETF approval may lead to short-term selling by some investors, the long-term potential for institutional investment in Bitcoin remains bright.
Cathie Wood and ARK Invest are among the hopeful contenders, and positive developments in discussions with the SEC have increased optimism for a spot Bitcoin ETF approval in the near future.