Leading cryptocurrency Bitcoin could experience a significant 74.1% increase in price within the first year following the launch of spot Bitcoin exchange-traded funds (ETFs) in the United States, according to estimates from cryptocurrency investment firm Galaxy Digital. . This forecast is based on a comprehensive analysis of potential market size and price impact. Here are the details…
Galaxy Digital thinks Bitcoin price will rise
Charles Yu, a research associate at Galaxy Digital, explained these intriguing predictions in a new blog post dated October 24. Yu’s analysis pointed to a total addressable market size of $14.4 trillion for Bitcoin ETFs within the first year after launch. To arrive at this figure, he considered the potential price impact of fund inflows into BTC ETF products and drew parallels with gold ETFs. According to Yu’s predictions, Bitcoin’s price could experience a 6.2 percent increase in the first month after the ETF’s launch. By the end of the first year, it may gradually decrease to a monthly increase of 3.7 percent.
Yu uses Bitcoin price data as of September 30 to make these predictions. If the expected 74.1% price increase becomes a reality, Bitcoin’s value will rise to an impressive figure of $59,200. Markus Thielen, director of research at Matrixport, a cryptocurrency financial services firm, also agrees with this prediction. In an Oct. 19 post, Thielen predicted that Bitcoin’s price could potentially reach somewhere between $42,000 and $56,000 if BlackRock’s proposed spot Bitcoin ETF is approved. Charles Yu goes on to predict that the US addressable market size for Bitcoin ETFs will reach $26.5 trillion in the second year after launch and $39.6 trillion in the third year.
ETF rejection negatively impacts forecasts
However, Yu was quick to acknowledge that any delay or rejection of BTC ETFs could significantly impact these price predictions. Despite these impressive predictions, Yu calls them “conservative” estimates because they do not take into account the “second-order effects” that could result from the approval of a spot Bitcoin ETF. Yu suggests that other international markets may follow the US’s lead and offer similar Bitcoin ETFs to a wider audience of investors in the near future.
According to Yu, 2024 holds significant potential for Bitcoin. The interplay of ETF inflows, the Bitcoin halving scheduled for April 2024, and the possibility of interest rates peaking in the near term could make this a pivotal year for the cryptocurrency. On a related note, research from Galaxy Digital suggests that Bitcoin spot ETFs could attract at least $14.4 billion in inflows in their first year of issuance. They highlight the advantages of ETFs over existing products such as trusts and futures, which are now worth more than $21 billion in total. Galaxy Digital predicts inflows could rise to $27 billion in year two and $39 billion in year three.
There is demand for BTC ETF
The US asset management industry is expected to be the most promising and direct market for Bitcoin ETFs. As of October 2023, assets managed by broker-dealers, banks, and registered investment advisors (RIAs) collectively amounted to $48.3 trillion. Bitcoin spot ETF products can provide a highly regulated means for investors to access Bitcoin through established financial institutions, thereby increasing the accessibility of the cryptocurrency.
Strong demand for Bitcoin ETFs is already evident in the market. Rumors of their potential issuance recently led to a 10% increase in Bitcoin prices in a matter of hours, while the emergence of BlackRock’s proposed Bitcoin ETF ticker triggered a 12% increase in Bitcoin’s value. Galaxy Digital highlights the limitations of existing investment products, such as high fees, low liquidity and tracking errors, making these products less accessible to a wider audience of investors. In contrast, the spot ETF is viewed as a more suitable investment vehicle for individuals who want direct exposure to Bitcoin without the need for self-custody.
There are many Bitcoin ETFs in application
It is expected to offer greater efficiency in terms of fees, liquidity and price tracking, potentially making it a more attractive option for investors. There are currently 12 spot Bitcoin ETFs being evaluated by the U.S. Securities and Exchange Commission (SEC) and filed by various firms, including Grayscale, BlackRock, VanEck and Fidelity. These filings underscore the growing interest in Bitcoin ETFs and the potential transformation in the cryptocurrency world.
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