If the ETFs are allowed, the blockchain analytics firm CryptoQuant predicts that $155 billion will flood into the bitcoin market cap.
If bitcoin spot exchange-traded funds (ETFs) are legalised, it would become a $900 billion asset, and the whole crypto market will rise by $1 trillion, according to data analytics firm CryptoQuant in a new analysis.
According to the paper, the first wave of institutional adoption in 2020-2021 was institutions adding bitcoin to their balance sheets, while the second wave may be financial institutions providing bitcoin access to their consumers through spot ETFs.
Several large financial institutions have applied to launch spot Bitcoin ETFs in the United States, with approvals perhaps coming as early as March 2024.
The potential inflow from spot ETFs would dwarf the money that entered the Grayscale Bitcoin Trust (GBTC) during the previous bull market cycle. With $16.7 billion in assets under management, GBTC is the world’s largest cryptocurrency fund. Grayscale and CoinDesk are subsidiaries of Digital Currency Group.
According to CryptoQuant, if the issuers who have applied to list bitcoin ETFs invest 1% of their Assets Under Management (AUM) in these ETFs, $155 billion might join the bitcoin market. This amounts to nearly one-third of bitcoin’s current market valuation. If this scenario plays out, the price of bitcoin may rise to between $50,000 and $73,000.
Historically, bitcoin’s market value has grown 3-5 times faster than its realised capitalisation throughout past bull markets. This means that for every $1 of new money entering the bitcoin market, the market capitalization may rise by $3-$5.
Bitcoin recently surged to $30,000 after Cointelegraph published a bogus claim on the approval of a spot bitcoin ETF. Some analysts believe that the frenetic positive price activity will hold bears at bay for some time.
“For the foreseeable future, no one will dare to short BTC.”Nobody will dare to short BTC now for the foreseeable future. Even if this Cointelegraph news was false, BTC can still grind higher in anticipation of the approval,” Markus Thielen, Matrixport’s head of research and strategy, stated in a Telegram broadcast.
The continuous lowering of the GBTC discount to the lowest in over two years reflects the positive attitude.
In January 2021, the crypto market capitalisation for the first time surpassed $1 trillion. At press time, the overall market cap was $1.13 trillion, with bitcoin accounting for more than half of that sum.