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Are ‘ETF Paper Bitcoins’ Suppressing BTC Prices? Analyst Provides Answers
- Fred Krueger, an investor at the crypto hedge fund 2718.fund, aimed to dispel the fear, uncertainty, and doubt (FUD) that have been circulating about “paper Bitcoin”—the notion that ETFs might be selling Bitcoin they do not actually possess—and to explain why Bitcoin’s price has not surged as dramatically as some might expect, despite significant ETF purchases.
- Krueger emphasized the stringent regulatory oversight governing these entities. “Both of these ETFs are subject to very strict regulatory oversight, including the SEC but also other agencies in the US,” he stated. This comprehensive oversight includes requirements for complete transparency, regular audits, and the use of third-party custodians for asset verification.
- Addressing the core concern about ETFs holding “paper Bitcoin,” Krueger provided specific data to refute this notion. “The reality is the ETFs have zero pure paper Bitcoin,” he stated unequivocally.
- Turning to the question of why Bitcoin’s price has not increased more dramatically despite significant ETF inflows, Krueger offered a nuanced explanation. He noted that Bitcoin is, in fact, up by 60% since the introduction of the ETFs, translating to a $600 billion increase in market capitalization.
- Krueger attributed the moderation in Bitcoin’s price growth to substantial selling pressures from various sources. “There’s been a bunch of selling,” he explained.
- Additionally, FTX sold its GBTC (Grayscale Bitcoin Trust) stake earlier in the year, and the Digital Currency Group (DCG) sold assets to resolve lawsuits. “We had a lot of selling,” Krueger summarized.
- Krueger contrasted BlackRock with entities like QuadrigaCX to underscore the disparity in regulatory compliance and operational scale. “BlackRock is highly regulated […] BlackRock has a robust corporate governance structure with committees for audit, risk, and compliance and very extensive internal controls,” Krueger added.
- Krueger acknowledged that some skeptics have attempted to analyze Bitcoin movement between specific dates to challenge these holdings. However, he emphasized that the facts are clear and verifiable.
- Krueger suggested that Bitcoin’s price could have been significantly higher. “We probably would be at $90k if there wasn’t any selling,” he posited.
- At press time, BTC traded at $68,752.
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