Bitcoin ETF Approval Could Bring $1 Trillion Market Cap Boost
Financial institutions are moving towards offering access to Bitcoin investing through spot Bitcoin ETFs. Companies like BlackRock, Bitwise, VanEck, Fidelity, and Valkyrie have applied to launch spot Bitcoin ETFs, with potential approvals expected in March 2024. According to a report by CryptoQuant, if these ETFs are approved, it could result in $155 billion flowing into the Bitcoin market. This influx of fresh money could potentially boost Bitcoin’s market cap by $450-$900 billion.
The report states that the total Assets Under Management (AUM) of these companies is around $15.6 trillion. If they were to allocate just 1% of their AUM to Bitcoin ETFs, it would amount to approximately $155 billion entering the market. This represents almost a third of Bitcoin’s current market capitalization.
CryptoQuant also explains that historically, during bull markets, Bitcoin’s market capitalization has grown at a rate 3 to 5 times higher than its realized capitalization. Therefore, for each additional dollar entering the market through ETFs, the market capitalization could potentially grow by 3x to 5x.
Fervor Surrounding Spot Bitcoin ETF
While misleading reports about BlackRock’s spot ETF approval caused some excitement in the cryptocurrency market, the overall sentiment remains positive. The discount on Grayscale Bitcoin Trust (GBTC) has also been decreasing, reaching its lowest point in 22 months. This narrowing discount indicates optimism as spot Bitcoin ETFs in the United States move closer to becoming a reality.
Hot Take: Potential Impact of Bitcoin ETF Approval
If spot Bitcoin ETFs are approved, it could have a significant impact on the crypto market. The inflow of $155 billion and potential market cap boost of $450-$900 billion would be substantial. Additionally, the approval of these ETFs could surpass the funds that flowed into the Grayscale Bitcoin Trust during the previous bull market. Overall, the anticipation and optimism surrounding spot Bitcoin ETFs highlight the growing interest in institutional adoption and investment in cryptocurrencies.
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