- Bitcoin spot ETF approval could increase the market capitalization by $1 trillion, driving the next wave of BTC adoption.
- The researcher anticipates a launch on March 2024 latest attributed to favorable court rulings for Grayscale and XRP legal fights.
- A $155 billion injection to BTC could increase Bitcoin market capitalization by $450 to $900 billion based on historical relationships.
Bitcoin (BTC) spot exchange-traded fund (ETF) approval could cause a significant surge in the total market capitalization, according to the head of research at CryptoQuant, potentially driving the next wave of institutional adoption for BTC.
Also Read: Bitcoin price did not need fake Spot BTC ETF news to break $29,000 barrier
Bitcoin spot ETF launch could inject $150 billion into BTC market
A researcher has predicted up to $155 billion in fresh money injection into the BTC market should the US Securities and Exchange Commission (SEC) approve the launch of a spot BTC ETF. In his opinion, the capital inflow would signify a new wave of institutional adoption in the flagship crypto’s market.
The researcher bases his assumption on the historical relationship between the total market capitalization and the realized capitalization of Bitcoin. In his words:
If $150 billion in fresh money enters the Bitcoin market, it could increase BTC’s market capitalization by $450 to $900 billion.
Nevertheless, he acknowledges how the potential of new capital inflow into the BTC market through the spot ETFs would dwarf the amount of money that flowed into the largest Bitcoin fund in existence, the Grayscale Bitcoin Trust (GBTC) fund, during the last bull market cycle.
Setting the timeframe for March 2024 at, the latest, the researcher says the probability of approval continues to increase as time goes by, with the Grayscale and Ripple (XRP) court wins in their respective legal battles providing strong hindwings.
Crypto ETF FAQs
What is an ETF?
An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.
Is Bitcoin futures ETF approved?
Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.
Is Bitcoin spot ETF approved?
Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.
Spot ETFs as the new way of institutional adoption
The analysis comes as the first wave of institutional adoption sprouted from the fact that institutions were adding Bitcoin to their balance sheet, thus “adoptions by institutions and for institutions.” This fueled the 2020 to 2021 Bull Run.
The next wave of Bitcoin institutional is seemingly advancing in the form of financial institutions offering their clients access to BTC investing through the spot BTC ETF. This is different from the 2020-2021 Bull Run, where the narrative bordered between institutions adding BTC to their balance sheet and making it accessible to customers.
Seven companies have applied to launch a spot BTC ETF in the US, pending SEC approval. They include,
Spot BTC ETF applications
The total assets under management (AUM) of these companies aggregates to $15.6 trillion, and if 1% of these assets were put into the ETFs, then the total US Dollar (USD) amount entering into the BTC market would be around $155 billion, representing a third of the current Bitcoin market capitalization.
Fresh money entering the market causes a surge in the realized cap as some BTC is bought at higher prices than the previous owner had paid for it initially.
In turn, the market capitalization would increase faster than the realized capitalization owing to the fact that the market price revalues all BTC in existence. On the other hand, in the realized price calculation, the market price only revalues the specific BTC that is being purchased.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
SEC Chair Gensler hints at resignation amid lawsuit from 18 states accusing the regulator of unlawful overreach
In a filing on Thursday, 18 states, along with the DeFi Education Fund, issued a lawsuit against the Securities and Exchange Commission, alleging that the regulator's crackdown on the crypto industry has been unlawful and unconstitutional.
Bitcoin Price Forecast: BTC eyes $100K, what are the key factors to watch out for?
Bitcoin trades below $90K in the Asian session on Friday as investors realized nearly $8 billion in profits in the past two days. Despite the profit-taking, Bitwise CIO Matt Hougan suggested that BTC could be ready for the $100K level, fueled by increased stablecoin supply and potential government investment.
Ethereum Price Forecast: ETH could rally to $4,522 despite mixed on-chain flows among investors
Ethereum is down over 1% on Thursday following record net inflows across ETH exchange-traded funds in the past six days. Despite the bullish market outlook, $300 million worth of unstaked ETH could hit the market and cause downward pressure on prices.
Crypto Today: Bhutan sells $33M BTC, McDonald’s launches NFTs, PEPE, SUI emerge top gainers
The aggregate cryptocurrency market capitalization shrank by 1.45% on November 14, reflecting a $42.6 billion dip. In the last 24 hours, 170,878 traders were liquidated to the tune of $485.13 million, per Coinglass data.
Bitcoin: Further upside likely after hitting new all-time high
Bitcoin hit a fresh high of $76,849 on Thursday as crypto-friendly candidate Donald Trump won the US presidential election. Institutional demand returned with the highest single-day inflow on Thursday since the ETFs’ launch in January.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.