Cryptocurrency market observers anticipate a potential approval of a spot Bitcoin Exchange-Traded Fund (ETF) in the United States could lead to a sudden drop in Bitcoin supply in the market, as funds would acquire as much as possible. Leading firms like Ernst & Young expect the SEC’s approval to trigger intense demand from institutions, raising questions about the availability of Bitcoin for the rest of the market.
Crypto entrepreneur Lark Davis suggests that a U.S. spot Bitcoin ETF could bring up to $30 billion into Bitcoin. In such a scenario, it is predicted that ETF issuers would need to purchase about 50% of all circulating Bitcoin to back their ETF products. However, many industry executives and analysts continue to express skepticism about the feasibility of acquiring such large amounts of Bitcoin.
Valkyrie CEO Leah Wald states that buying significant amounts of Bitcoin is theoretically possible, but acquiring all circulating Bitcoin is impractical, and there is still a substantial amount of Bitcoin that has not been mined. Wald emphasizes Bitcoin’s decentralized nature and the likelihood that many owners would refuse to sell at any price, providing a natural barrier against monopolization.
Matt Hougan of Bitwise, another applicant for a spot Bitcoin ETF, believes that no one can monopolize Bitcoin due to the economic principle of scarcity, which dictates that the price of a scarce good will rise to meet demand. He acknowledges that while it’s possible for someone to corner a significant amount of Bitcoin, the increasing reluctance of sellers would drive the price higher.
Samson Mow of Jan3 echoes Hougan’s stance, asserting that the high prices fueled by products like a spot Bitcoin ETF would make it difficult to purchase all circulating Bitcoin, as the price would increase with the availability of fewer tokens to buy.