The speculation surrounding the impact of spot ETFs on Bitcoin prices has been a hot topic in the market. Major financial institutions like BlackRock and Fidelity expressing interest in Bitcoin spot ETFs has led to increased investor confidence and a surge in BTC prices. However, Meltem Demirors, the chief strategy officer at coinShares, believes that the rise in BTC price cannot be solely attributed to spot ETFs. She points out that many prominent institutions in the US are actively seeking ways to provide Bitcoin access to their clients, with over $27 trillion in client assets waiting to be deployed.
BlackRock’s recent application for a Bitcoin ETF has played a crucial role in rebuilding investors’ trust in the market. Rumors of other industry giants like Fidelity Investments, Invesco, and WisdomTree filing for spot Bitcoin ETFs have also fueled market optimism. The potential influx of just a fraction of the $27 trillion in managed client assets into spot Bitcoin ETFs could have an unimaginable impact on BTC’s price. Even a mere 1% allocation would amount to over $270 billion, dwarfing Bitcoin’s current market capitalization of $590 billion.
Looking at historical analysis, the performance of gold prices following the launch of the first gold ETF in 2004 provides valuable insights. The initial gold ETF significantly boosted the price of gold, eventually reaching an all-time high of nearly $2,000. Bitcoin has often been compared to digital gold, and if it were to capture just 10% of gold’s market share, it would double Bitcoin’s current market capitalization.
Another benchmark to consider is the total market capitalization of the global stock market, which currently amounts to $100 trillion. Apple shares, for example, account for only 3% of this total. Additionally, the supply side plays a crucial role in price appreciation. Expert Alessandra Ottaviani suggests that BlackRock and Fidelity would only need to allocate 0.3% of their managed capital into Bitcoin to acquire all existing BTC on other exchanges.
Data shows that an increasing number of coins are being withdrawn from exchanges, indicating a potential bull run driven by influential institutions. However, there is still the possibility of the SEC rejecting applications for Bitcoin spot ETFs. Alternatively, BlackRock could choose to purchase Bitcoin over-the-counter (OTC), such as the 200,000 BTC seized by the US government. This could trigger a “buy the rumor, sell the news” event. Nevertheless, procuring BTC OTC from the government could be profitable in the long run, preventing a flood of BTC holdings in the open market.
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