- 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.
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