As hinted at when Bitcoin (BTC) surged amid a false report of BlackRock’s Bitcoin Spot ETF application being approved, the crypto space is most-certainly in for a wild ride once the new DeFi asset class finally comes to market.
As you’ll already know, the fate of the several big-hitting Bitcoin Spot ETF applications in the US lie in the hands of the Securities and Exchange Commission (SEC) - the Gary Gensler-led regulator that’s never hesitated in showing its aversion to crypto matters (nor making finance giants such as BlackRock, Fidelity, and Invesco sit about and wait for answers regarding their applications).
Further, in wake of a false report that the SEC had given the world’s largest asset manager’s Bitcoin Spot ETF application the go-ahead, the OG cryptocurrency quickly surged to almost $30,000 (before plummeting back to a ‘more equilibrium’ price of around $27,000 once the rumour’s fictitious nature was revealed).
We apologize for a tweet that led to the dissemination of inaccurate information regarding the Blackrock Bitcoin ETF.
— Cointelegraph (@Cointelegraph) October 16, 2023
An internal investigation is currently underway. We are committed to transparency and will share the findings of the investigation with the public once it is…
That being said, the noteworthy excitement garnered throughout the day was certainly something that bodes well for the crypto space, as it potentially foreshadowed what may happen once (or if) the Bitcoin Spot ETF market gets underway.
With this in mind, blockchain analysts platform CryptoQuant has been speculating on what tangible effects Bitcoin Spot ETF approvals may have on the crypto market if they come to fruition - which is what this article is about to explore.
Bitcoin Spot ETFs - A Prediction of the Impact on Crypto
Per CryptoQuant’s calculation models, it’s thought that Bitcoin’s market cap could grow by $155 billion once Spot ETFs are given the green light. As Bitcoin’s market cap is currently at around $555 billion today, this would be a substantial increase of 25+%.
In turn, CryptoQuant predicts that Bitcoin will become a $900 billion asset, whilst the crypto industry at large will grow to $2 trillion…
Where, for context, that’ll be a 100% increase on the crypto industry’s $1 trillion valuation of today.
Using Crypto History to See Into the Future
To reach such predictions, the analytics platform flocked to the history books to see what they tell us.
Here, the report referenced the first wave of crypto institutional adoption from 2020-2021, and how big-name finance houses adding substantial amounts of Bitcoin to their balance sheets did wonders for crypto’s market cap.
Most notably, this includes Grayscale - a now-Bitcoin Spot ETF applicant - who introduced its Grayscale Bitcoin Trust (GBTC), the largest crypto fund in the world with over $16.7 billion worth of assets under management (AUM).
This time around, it’ll be Bitcoin Spot ETFs that such entities will be able to offer to clients - an asset class that’s known for its ease of access and direct exposure to Bitcoin’s price movements.
With such ease of access in mind, CryptoQuant expects Bitcoin Spot ETFs to prompt even more capital inflows into crypto. Such consensus was formed on the assumption that if big-name applications put just 1% of their AUM in Bitcoin Spot ETFs, around $155 billion will make its way into the Bitcoin ecosystem - i.e. a third of its current market cap.
These calculations were based on the performances of previous bull runs, as with Bitcoin’s market capitalisations previously growing 3-5 times more than its realised capitalisations, the analytics firm suggests that each $1 addition to the Bitcoin landscape could turn into $3-$5.
And finally, when it comes to the price movements of Bitcoin - i.e. something that Spot ETF holders will have great exposure to, as well as the thing most casual traders care about most - CryptoQuant predicts that added capital inflows into the Bitcoin ecosystem could push BTC to a price between $50,000 and $73,000.
Of course, these calculations are merely speculative for now, however March 2024 (at the latest) is the time period in which many onlookers have pencilled-in when it comes to the SEC finally approving Bitcoin Spot ETFs.
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This article is intended for educational purposes and is not financial advice.
