CryptoQuant, a prominent on-chain data platform, has recently unveiled fascinating insights into the potential market implications of a Bitcoin spot ETF approval by the SEC. This highly anticipated development comes on the heels of recent legal victories by Ripple and Grayscale.
According to CryptoQuant’s analysis, the influx of capital into spot ETFs could potentially surpass the impressive gains witnessed by the Grayscale Bitcoin Trust (GBTC) during the last bull market cycle. To provide some context, GBTC, currently the world’s leading cryptocurrency fund, manages a jaw-dropping $16.7 billion in assets. Notably, Grayscale and CoinDesk operate under the Digital Currency Group umbrella.
If the issuers who’ve applied for Bitcoin ETFs decide to allocate just 1% of their Assets Under Management (AUM) into these ETFs, a staggering $155 billion could flow into the Bitcoin market. This figure represents about a third of Bitcoin’s present market value. As a result, Bitcoin’s price could potentially surge to a range of $50,000 to $73,000 if this prediction materializes.
In a significant milestone, the cryptocurrency market exceeded the $1 trillion mark for the first time in January 2021. As of this report, Bitcoin dominates the scene, accounting for over half of the total market capitalization, which currently stands at $1.13 trillion.
Looking closer at the numbers, the combined assets managed by organizations vying for Bitcoin spot ETFs reach an astonishing $15.6 trillion. Even if a mere 1% of this colossal sum finds its way into Bitcoin, BTC’s market value could see a remarkable $155 billion boost. Such a substantial inflow could act as a catalyst, setting off a chain reaction of further investments.
The market’s bullish sentiment was evident when a false rumor about a Spot Bitcoin ETF approval sent Bitcoin prices soaring to $30,000. Many experts believe that this bullish momentum will likely deter bearish trends for the foreseeable future.
Marcus Thielen, a prominent figure at Matrixport, remarked, “Shortly, shorting BTC will be a move few will dare to make.”
He further speculated that even if the ETF news turned out to be baseless, the upward trajectory of BTC would remain unaffected. Adding to the optimism, GBTC discounts have dwindled to their lowest in over two years.
While the SEC’s approval of Bitcoin spot ETFs seems almost inevitable, the timeline for this approval remains a subject of debate. CryptoQuant’s October forecast suggests that an SEC nod could initially boost Bitcoin’s market value by $150 billion, with potential subsequent investments potentially pushing it up by another $900 billion.
Also Read: Major Players Eye Bitcoin ETFs: What it Means for Crypto Investors?
CryptoQuant’s research also indicates that financial institutions offering Bitcoin access through spot ETFs might usher in the second wave of institutional adoption, following the initial wave witnessed in 2020-2021 when institutions began adding Bitcoin to their balance sheets.
Historical data reveals that Bitcoin’s market capitalization has increased by 3-5 times its realized capitalization during bull phases. CryptoQuant’s projections suggest that for every fresh dollar invested in the Bitcoin market, the overall market capitalization could potentially rise by $3 to $5. This signals a promising future for Bitcoin and the broader cryptocurrency market.
What do you think? Will a Bitcoin spot ETF approval lead to a bull market for Bitcoin?
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