The Potential Impact of a Bitcoin Spot ETF
There is high anticipation surrounding the approval of a Bitcoin spot ETF, as it is expected to have a significant influence on the price of Bitcoin. Standard Chartered’s head of FX research, Geoff Kendrick, predicts that approving a Bitcoin spot ETF could propel the cryptocurrency to new heights, potentially reaching $200,000 by the end of 2025. Kendrick’s analysis suggests that the approval and subsequent inflows from these ETFs could increase BTC’s value by over 300%, based on inflows between $437,000 and $100,000 by the end of 2024 and an estimated minting of 1.32 million new Bitcoins. Inflows for this year alone are projected to be between $50 billion and $100 billion.
Kendrick also considers the impact of the upcoming halving cycle and miners hoarding tokens, which could lead to a decline in BTC’s available supply. This reduction in supply, coupled with increased demand driven by ETFs, could result in significant price increases, potentially reaching $100,000 before the end of 2024.
Historical Context and Supply Dynamics
Kendrick draws a parallel between the potential impact of a Bitcoin spot ETF and the historical impact of a gold spot exchange-traded product on the price of gold. Following the launch of the SPDR Gold Shares in 2004, the value of gold experienced a significant increase, more than quadrupling over seven years. Kendrick uses this historical precedent to support his prediction for Bitcoin, expecting a similar or even more accelerated price increase for the cryptocurrency.
Additionally, Kendrick highlights the supply dynamics of Bitcoin. He notes that the percentage of Bitcoin’s total supply in circulation is at an all-time low, indicating that its supply is becoming more price-inelastic. This means that any increase in demand is likely to have a more pronounced impact on Bitcoin’s price. The limited and diminishing supply of Bitcoin, a fundamental aspect of its design, further contributes to the potential for significant price increases in response to growing demand.
Hot Take: The Potential of a Bitcoin Spot ETF
Standard Chartered’s head of FX research, Geoff Kendrick, predicts that the approval of a Bitcoin spot ETF could drive the cryptocurrency’s price to unprecedented heights, potentially reaching $200,000 by the end of 2025. Kendrick’s analysis suggests that the inflows from these ETFs, coupled with an estimated minting of new Bitcoins and the upcoming halving cycle, could lead to significant price increases. He draws parallels with the historical impact of a gold spot exchange-traded product on the price of gold, indicating the potential for a similar or even more accelerated price increase for Bitcoin. Additionally, Kendrick highlights Bitcoin’s limited and diminishing supply as a factor that could contribute to substantial price gains in response to growing demand.
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