Bitcoin briefly soared toward $30,000 following a false spot Bitcoin ETF approval information before swiftly retreating to the $28,000 level. But an actual approval could add $1 trillion to the crypto market, according to the latest report by CryptoQuant.
The next wave of Bitcoin institutional adoption appears to be advancing in the form of financial institutions offering access to the flagship cryptocurrency investing to their clients via spot Bitcoin ETFs.
$1 Trillion Market Cap Boost
Several companies, such as BlackRock, Bitwise, VanEck, Fidelity, and Valkyrie, among others, have applied to launch spot Bitcoin Exchange Traded Funds (ETFs). While these are not expected to get approvals this year, industry experts believe green lights could be on the horizon, potentially as early as March 2024.
In this case, Bitcoin could witness inflows of $155 billion. The entry of fresh money could further boost Bitcoin’s market cap by $450-$900 billion, CryptoQuant said in its latest report.
“We could expect $155 billion will flow into the Bitcoin market once these ETFs are approved. The total Assets Under Management (AUM) of these companies are around $15.6 trillion. If they were to put 1% of their AUM into these Bitcoin ETFs, the total US dollar amount that would enter the Bitcoin market would be ~$155 Billion. To put it in context, these amounts represent almost a third of the current market capitalization of Bitcoin.”
In past bull markets, Bitcoin’s market capitalization has typically expanded at a rate of 3 to 5 times higher than its realized capitalization. This implies that for each additional dollar entering the Bitcoin market, the market capitalization could potentially grow by 3x to 5x, CryptoQuant explained.
Furthermore, the anticipated capital influx from spot ETFs is poised to surpass the funds that flowed into the Grayscale Bitcoin Trust (GBTC) during the previous bull market cycle. Operated by Digital Currency Group (DCG), GBTC is currently the world’s largest cryptocurrency fund, managing over 620k BTC holdings.
Ferver Surrounding Spot Bitcoin ETF
Misleading reports concerning BlackRock’s spot ETF approval created a stir in the cryptocurrency market earlier this week. But the overall sentiment remains strong.
The bullish outlook is also evident in the ongoing reduction of the discount on Grayscale Bitcoin Trust (GBTC), which hit its lowest point in 22 months last Friday. The narrowing discount has ignited optimism as spot Bitcoin ETFs in the United States edge closer to becoming a reality.