Why can BTC soar 170% thanks to ETFs?

Investing.com - The launch of the ProShares Bitcoin Strategy ETF (NYSE:BITO) fund could boost bitcoin purchases by new individual investors, which could see the value of BTC rise to $168,000, or 170%, by year-end, according to Tom Lee, founder of global analyst platform Fundstrat and a big digital currency fan.

On Tuesday, October 19, specialized exchange-traded products provider ProShares launched the Bitcoin Strategy ETF, which will be the first U.S. ETF linked to cryptocurrencies. Such an exchange-traded fund should, in theory, give more investors access to bitcoin without having to worry about holding this virtual asset. Today, the outcome of this news was the rise in the price of bitcoin to a record high of around $65,000.

According to Lee, two factors will push bitcoin up: the expectation that the launch of the new ETF will attract a significant influx of funds and the fact that some investors already have access to bitcoins and the new way of owning them is likely to encourage more purchases.

Lee said cryptocurrencies make up about 1% of allocated liquid assets, but the influx of ETF futures will serve as a key new short-term driver for bitcoin.

Demand for bitcoin ETFs could increase by $50 million a day if, for example, the BITO fund proves as popular as the Invesco QQQ Trust (NASDAQ:QQQ). QQQ has about $190,999 million in assets, and another bitcoin-related fund, Grayscale Bitcoin Trust (BTC) (OTC:GBTC), has about $32 million in assets, making them the largest crypto funds.