Anthony Scaramucci, the founder of SkyBridge Capital and a former White House communications director, has expressed his bullish views on Bitcoin in a recent interview with CNBC. He said that the approval of a Bitcoin spot ETF by the U.S. Securities and Exchange Commission (SEC) will “unleash tens of thousands of Wall Street salesmen” who will promote the cryptocurrency to their clients.
Scaramucci argued that Bitcoin is a superior store of value than gold or fiat currencies, and that it has the potential to become a global reserve asset. He said that the current market capitalization of Bitcoin, which is around $1.2 trillion, is only a fraction of the total value of gold, which is estimated at $10 trillion. He also said that Bitcoin has a fixed supply of 21 million coins, unlike fiat currencies that can be printed endlessly by central banks.
He added that the launch of a Bitcoin spot ETF, which would allow investors to buy and hold the actual Bitcoin rather than a derivative product, would increase the demand and liquidity of the cryptocurrency. He said that this would attract more institutional and retail investors, as well as hedge funds and family offices, to invest in Bitcoin. He estimated that “tens of billions” of dollars would flow into Bitcoin as a result of the spot ETF approval.
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However, the SEC has repeatedly delayed or rejected applications for a spot ETF, citing concerns over market manipulation, fraud and investor protection. The latest deadline for a decision on the VanEck Bitcoin Trust, one of the most prominent proposals, is November 14, 2023. If the SEC does not approve it by then, it will have to either deny it or initiate a rule change process that could take several months.
So, what would happen to the price of bitcoin if the spot ETF were not approved? There are different scenarios and opinions on this question, but here are some possible outcomes:
The price drops temporarily but recovers quickly. Some analysts believe that the market has already priced in the low probability of a spot ETF approval, and that a rejection would not have a significant impact on the long-term trend of bitcoin. They argue that there are other positive factors supporting the demand and adoption of bitcoin, such as institutional interest, innovation and regulation in other jurisdictions, and the growth of the decentralized finance (DeFi) sector. Moreover, they point out that there are already other types of bitcoin-related products available to investors, such as futures-based ETFs, trusts and funds.
The price drops significantly and stays low for a while. Some analysts believe that a spot ETF rejection would be a major blow to the credibility and confidence of the bitcoin market, and that it would trigger a sell-off among investors who were hoping for a positive outcome.
They argue that a spot ETF would have been a game-changer for the industry, as it would have opened the door to a massive influx of capital from retail and institutional investors who are currently deterred by the complexity and risk of buying and storing bitcoin directly. Moreover, they point out that the lack of a spot ETF could widen the gap between bitcoin and other asset classes, such as stocks and bonds, which have more regulated and diversified investment options.
The price does not change much or increases slightly. Some analysts believe that a spot ETF approval or rejection would not have a major impact on the price of bitcoin, as it is not the main driver of its value. They argue that bitcoin is primarily influenced by its own supply and demand dynamics, which are determined by factors such as its scarcity, security, innovation and network effects.
Moreover, they point out that bitcoin has shown resilience and growth in the past despite regulatory uncertainty and setbacks, and that it has proven to be uncorrelated with other asset classes, making it an attractive hedge against inflation and market volatility.
Scaramucci also commented on the recent volatility of Bitcoin, which dropped from an all-time high of over $69,000 to below $55,000 in a matter of days. He said that this was normal for a new and emerging asset class, and that he was not worried about the short-term price movements. He said that he was focused on the long-term potential of Bitcoin, and that he believed that it would reach $100,000 by the end of 2024.