Bitcoin’s (BTC-USD) epic run is picking up steam as we head toward year’s end. The world’s most valuable cryptocurrency has gained almost 10% in December and is up more than 60% in the past three months. BTC has soared about 165% this year. At just under $44,000, Bitcoin is hovering near a 52-week high.

The reason for the optimism? There are growing hopes that the Securities and Exchange Commission is close to finally approving a so-called spot Bitcoin exchange-traded fund, an ETF that would be allowed to buy actual Bitcoin at its current price as opposed to Bitcoin futures. Current crypto ETFs, such as the ProShares Bitcoin Strategy ETF (NYSEARCA:BITO) and VanEck Bitcoin Strategy ETF (CBOE:XBTF) only invest in future, not actual coins.

Spot Bitcoin ETF Hopes Trigger Crypto Rally

There are reports that the SEC is working with iShares owner BlackRock (NYSE:BLK) to approve a spot Bitcoin ETF from the world’s largest asset manager by early January. Bob Loukas, a crypto trader with nearly 250,000 followers on X, wrote in a recent tweet that “the level of SEC engagement and back/forth/changes on the #bitcoin ETF tells us this is a 99.9% done deal.”

The crypto enthusiasm has lifted not just BTC but also the prices of other digital currencies, such as Ethereum (ETH-USD), Binance (BNB-USD) and Solana (SOL-USD). The stocks of companies in the crypto universe, namely Coinbase (NASDAQ:COIN) and Bitcoin miners like Riot Platforms (NASDAQ:RIOT) and Marathon Digital (NASDAQ:MARA), have skyrocketed as well.

But you know what they say in investing about buying the rumor and selling the news? If the SEC finally does go ahead and give the green light to BlackRock and potentially other Wall Street firms to launch spot Bitcoin ETFs, is that already priced into Bitcoin given its massive run?

Anthony Pompliano, an influential newsletter writer and investor, wrote in a recent Substack post that approval of a spot Bitcoin ETF “may not be as bullish as you think.” Pompliano is not suggesting that Bitcoin is going to tank per se. But he does think that calls for the crypto to surge in value after an SEC decision are overdone.

Pompliano added in a post on X that investors need to remember “when your Economics 101 professor taught you supply and demand.” He noted that most Bitcoins are already in circulation and added that most of those are owned by the so-called HODLer crowd who “refuse to sell.”

So even if more investors look to buy Bitcoin on the news of a spot ETF, that can only move the needle for prices so much. Pompliano wrote in another X post that Bitcoin is an “already large market that is unlikely to be moved exponentially” by the inflows from spot ETFs.

Bigger Than S&P 500 Index Funds?

Others who have more skin in the game are understandably more bullish. Grayscale CEO Michael Sonnenshein recently said in an interview with CNBC that a spot Bitcoin ETF opens the door for more financial advisers to recommend crypto ETFs to clients. “When we look ahead to the hopeful approval for spot Bitcoin ETFs, it really is going to unlock the opportunity for a part of the investment community that … has unfortunately been locked out of the opportunity to participate in having Bitcoin exposure to their portfolios,” Sonnenshein said.

Crypto evangelist Michael Saylor, the chairman of software firm MicroStrategy (NASDAQ:MSTR) and big investor in Bitcoin, is even more upbeat. Saylor told Bloomberg that a spot Bitcoin ETF “may be the biggest development on Wall Street in 30 years,” even comparing it to the launch of S&P 500 index funds. 

The Bottom Line

The truth about what’s next for Bitcoin probably lies somewhere in between Sonnenshein’s and Saylor’s unabashed optimism and Pompliano’s more muted outlook.

A spot Bitcoin ETF would certainly bring more investors to the table, but it may not propel BTC back to its record high of just under $70,000 until there is a more compelling use case for Bitcoin. People must start using Bitcoin more as an actual currency (namely to buy stuff) instead of just holding it as a speculative asset.

As of this writing, Paul R. La Monica did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.