Spot Bitcoin ETF Could Boost BTC Price by 74% in First Year, Says Galaxy Digital
A spot-based bitcoin exchange-traded fund (ETF) has the potential to attract significant capital and drive up the price of BTC by 74% within its first year, according to Galaxy Digital. The cryptocurrency investment company, which is among the applicants seeking approval for a spot bitcoin ETF from the U.S. Securities and Exchange Commission (SEC), published an analysis outlining the market potential of such an investment product.
Galaxy Digital believes that a spot bitcoin ETF would accelerate adoption by offering investors direct exposure to bitcoin without the need to own the digital asset. The company highlights two main factors that would contribute to its impact: expanded accessibility across wealth segments and formal recognition from regulatory bodies and trusted financial service providers.
The analysis estimates that a spot bitcoin ETF would attract $14 billion in its first year, with inflows increasing to $27 billion in the second year and $39 billion in the third year. Additionally, Galaxy Digital predicts that the price of bitcoin could rise by 74% in the first year following approval of an ETF.
SEC Yet to Approve Spot Bitcoin ETF
While the SEC has approved ETFs holding bitcoin futures, it has yet to greenlight a spot bitcoin ETF in the United States. Previous rejections were based on concerns over fraud, market manipulation, custody, and investor protection. However, this year the regulator accepted several applications for review, including Galaxy Digital’s partnership with Invesco.
Galaxy Digital believes that anticipation for the approval of ETFs is growing, and these investment products could see significant inflows driven primarily by wealth management channels that currently lack safe and efficient access to bitcoin exposure at scale. The firm also suggests that 2024 could be a pivotal year for bitcoin, with inflows from ETFs and other factors potentially driving its growth.
Hot Take: Spot Bitcoin ETF Could Revolutionize Adoption
The potential approval of a spot-based bitcoin exchange-traded fund (ETF) in the United States has generated significant anticipation. According to Galaxy Digital, such an ETF would not only attract substantial capital but also drive up the price of BTC by 74% in its first year. This investment product would provide investors with direct exposure to bitcoin without requiring them to own the digital asset, which could catalyze adoption.
Galaxy Digital’s analysis highlights the expanded accessibility and greater acceptance that a spot bitcoin ETF would bring, making it an attractive investment option. The estimate of $39 billion in inflows by the third year after launch demonstrates the potential market size and investor interest. With growing anticipation for ETF approvals, 2024 could be a transformative year for bitcoin.
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