Tether Co-founder Warns of Bitcoin ETF Challenges
In a recent interview with CNBC, William Quigley, co-founder of stablecoin Tether and Worldwide Asset Exchange (WAX), shared his insights on the imminent entry of Bitcoin exchange-traded funds (ETFs) into the market.
Quigley acknowledged the potential for increased prices due to growing institutional interest. However, he tempered the rising enthusiasm by pointing out potential hurdles in the form of mechanical complexities.
Key Queries from Quigley:
- Will risk controls match the huge Bitcoin volatility?
- Can firms secure enough coins to back ETF shares?
- What happens once daily minting gets halved soon?
Quigley expressed optimism about Bitcoin ETFs, emphasizing their role in broadening access to institutional capital. The co-founder highlighted that these ETFs could attract funds collectively controlling trillions of dollars. Even a small percentage of this massive capital entering the Bitcoin market, he noted, could lead to a substantial surge in the cryptocurrency’s value.
Read more: Cboe Greenlights Spot Bitcoin ETF Listings
The conversation touched on the recent recovery of Bitcoin, rising from its lows of $16,000 in November 2022 to $45,000 at present. Quigley attributed this rise in price to a potential influx of institutional capital.
Tether co-founder shares key concerns
Despite the positive outlook, Quigley acknowledged several unanswered questions and challenges surrounding the mechanics of Bitcoin ETFs. He raised concerns about how institutions would assess the suitability of Bitcoin for their clients and whether it would be treated as a marginal asset.
Questions also lingered about how institutions would acquire Bitcoin, considering the limited daily minting of new coins. He also cited that the vast majority of Bitcoin is being held in long-term positions.
“There are only 900 Bitcoin made a day, minted a day, 450 a day after April when the Bitcoin halving takes place. There’s only about 1.8 million Bitcoin freely available to trade on exchanges. That’s about a little less than $100 billion worth of Bitcoin,” said Tether co-founder.
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Quigley speculated on how institutions might approach Bitcoin ETFs, suggesting that some could limit access to institutions initially. On the other hand, he mentioned that self-directed investment platforms like Schwab and Robinhood might offer more flexibility for individual investors.
Tether co-founder delved into the intricacies of how institutions would acquire and hold Bitcoin, considering the scarcity of the cryptocurrency and its market dynamics.
