Willy Woo on How Synthetic ETFs Shape Bitcoin’s Price Landscape

Willy Woo, a well-regarded and widely followed on-chain analyst, recently shared his views on Bitcoin’s valuation on platform X. He primarily attributed the perceived undervaluation of Bitcoin to the prevalence of “synthetic ETFs” or futures contracts. This notion challenges some of the widespread beliefs about the cryptocurrency’s pricing dynamics.

Woo specifically addressed the popular sentiment that purchasing large amounts of BTC on exchanges would result in a price surge. In response, he stated:

“NO! This is a fallacy. This happened all through the 2022 bear.”

He further elaborated that such buying sprees don’t lead to the expected supply shock. The main reason, according to Woo, is the introduction of synthetic BTC through futures markets. He mentioned:

“The market made a bottom when futures markets relented.”

Woo went on to explain the choices available for potential BTC investors. He said that those wanting exposure to BTC often consider a futures ETF as a viable option. However, he emphasized that these don’t cause the expected market impact:

“This doesn’t create a supply shock as these are just paper bets on price going up, a hedge fund can take the other side of the bet, you’ve minted a new synthetic BTC. And the limit on this is infinite.”

To navigate this situation, Woo recommended the approval and adoption of a spot ETF. He passionately expressed:

“A spot ETF will help rectify this issue.”

Voicing his concerns and frustrations, Woo pointed out the prolonged delay by the SEC in approving a spot ETF. This is despite the futures markets flourishing for seven years. He critically noted:

“For 7 years the spot ETF has been denied, while futures markets have flourished. The SEC’s agenda has been very clear.”