Spot Bitcoin ETF approvals could add $1 trillion to crypto market cap, CryptoQuant says
|Bitcoin will become a $900 billion asset, and the total crypto market will grow by $1 trillion, should the bitcoin spot exchange-traded funds (ETFs) be approved, data analytics firm CryptoQuant wrote in a recent report.
The first wave of institutional adoption in 2020-2021 came from institutions adding bitcoin to their balance sheets, while the next wave could be financial institutions providing bitcoin access to their clients through spot ETFs, CryptoQuant argued in the report.
Several major financial institutions have applied to roll out spot Bitcoin ETFs in the U.S., with approvals potentially on the horizon by March 2024 at the latest.
The potential inflow from spot ETFs would be significantly larger than the money that entered the Grayscale Bitcoin Trust (GBTC) in the last bull market cycle. GBTC is the largest cryptocurrency fund in the world, currently with $16.7 billion in assets under management. Digital Currency Group is the parent company of Grayscale and CoinDesk.
CryptoQuant says that if the issuers that have applied to list bitcoin ETFs put 1% of their Assets Under Management (AUM) to these ETFs, approximately $155 billion could enter the bitcoin market. This represents almost a third of bitcoin's current market capitalization. Should this scenario take place, it would hypothetically push bitcoin's price to between $50,000 and $73,000.
Historically, during previous bull markets, bitcoin's market capitalization has grown 3-5 times more than its realized capitalization. This suggests that for every $1 of fresh money entering the bitcoin market, the market capitalization could increase by $3-$5, CryptoQuant added.
Bitcoin recently momentarily jumped to $30,000 after Cointelegraph published a false report about a spot bitcoin ETF being approved. According to some observers, the frenzied bullish price action would keep bears at bay for some time.
"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, head of research and strategy at Matrixport, said in a Telegram broadcast.
The crypto market capitalisation first crossed the $1 trillion mark in January 2021. At press time, the total market cap stood at $1.13 trillion, with bitcoin accounting for over 50% of the tally.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.