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Yet, the document also highlights a suspected peculiarity in the law that could enable the ETF to be approved – without any action from the SEC.
The note reads:
In the scenario, he told CoinDesk that $300m in assets would mean that the ETF's authorized participants would need to source this volume of bitcoin for the ETF, sending prices higher. (Bitcoin's market cap was just over $14.5bn at press time).
Ultimately, Bogart projects that the Winklevoss Bitcoin ETF has a less than 25% chance of being approved due to a "confluence of fear, uncertainty and doubt coupled with basic incentives at the SEC".
"The resulting effort to source the underlying bitcoin for the trust would likely drive the price of bitcoin up significantly," Bogart writes.
The catch, however, is that Bogart doesn't believe one of the major bitcoin ETF filings – the Winklevoss Bitcoin ETF, proposed by investors Cameron and Tyler Winklevoss – is likely to be approved.
Bitcoin Investment Trust Spencer Needham by Pete Rizzo on Scribd
"We think this is interesting only because, politically, it might be easier for the individuals responsible for making the decision to let the decision go to auto-approval—which essentially only means they lack of a reason to disapprove—than it is to stick a stamp of approval on the rule change," it reads.
The note suggests Needham isn't sure if it's interpreting its findings correctly, but that the possibility could add an interesting dynamic to the March decision.
Bogart goes on to label any approval a "low probability" event with "very significant upside".
Writing about the potential impact of an ETF on the nascent market, analyst Spencer Bogart speculates that such an approval is likely to have a "profoundly positive" effect on the price of bitcoin, and that the $300m estimate is "conservative".
Though the US Securities and Exchange Commission (SEC) is expected to make a final decision on the filing by 11th March, Bogart speculates that the ETF's "probability of approval is very low".
Highlighted in the note is language that Needham says indicates could result in a scenario in which the SEC doesn't disprove the filing, and as a result, it is automatically approved.
In statements, however, Bogart added that he believes this possibility to be "highly unlikely".
A new investor note published today by analyst Needham & Company projects that a bitcoin exchange-traded fund (ETF) could attract as much as $300m in new assets in its first week alone.
For more analysis, read the full investor note below:
"Taken together, we think the positive effect that a bitcoin ETF would have on the price of bitcoin is vastly underappreciated and that the probability of approval is drastically overestimated within the industry."
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