Crypto financial services platform Matrixport has conducted an analysis on the potential effects of a spot Bitcoin exchange-traded fund (ETF) on the cryptocurrency market. According to their newly released report, if the US Securities and Exchange Commission (SEC) approves a spot Bitcoin ETF, it could push the price of Bitcoin between $42,000 and $56,000 per unit. This prediction takes into account the significant increases in Bitcoin’s value over the current week, with the aim of surpassing the $30,000 threshold.
The operations of a spot Bitcoin ETF have been influencing the price of Bitcoin, as investors eagerly await approval for institutional and mainstream exposure to the digital asset. Matrixport’s analysis draws a parallel between the potential impact of a Bitcoin ETF and the $120 billion precious metals ETF industry. If a small portion, approximately 10-20%, of investors in precious metal ETFs diversified their holdings into Bitcoin ETFs, it could result in an influx of $12 billion to $24 billion into the cryptocurrency market.
Matrixport’s report highlights that the approval of a BlackRock Bitcoin ETF application would likely lead to an increase in the market cap of the leading stablecoin, USDT, by as much as $50 billion. This increase in USDT’s market cap would act as an intermediary, facilitating the inflow of investments into Bitcoin. The report suggests that even a modest 1% allocation recommendation for Bitcoin from the 15,000-strong US registered investor advisor (RIA) community, overseeing around $5 trillion, could usher in approximately $50 billion in inflows.
In the short term, if there is a lesser influx of $24 billion into Tether, Matrixport predicts that Bitcoin’s price could rise to $42,000. However, if the approval of a spot Bitcoin ETF results in the expected inflow of $50 billion, Bitcoin’s price could reach $56,000. Currently trading at $29,370 with a market cap of $625.03 billion, these scenarios represent significant increases of 90% and 43% respectively.
The price of Bitcoin has historically reacted to news regarding spot Bitcoin ETFs. Even the announcement of applications from investment companies like BlackRock and Fidelity sent Bitcoin surging. Furthermore, rumors of the SEC’s approval of BlackRock’s ETF application caused a frenzy in the industry, leading to the liquidation of $74 million worth of BTC positions in just a few minutes. It is evident that the potential approval of a spot Bitcoin ETF would unlock a substantial amount of capital for the crypto industry.
If approved, a spot Bitcoin ETF has the potential to attract a massive inflow of capital from institutional investors. Analysts estimate that financial institutions could bring in up to $17.7 trillion. Fundstrat co-founder Tom Lee suggests that spot ETFs could even push Bitcoin’s price to $150,000 or higher by the end of next year.
The approval of a spot Bitcoin ETF by the US Securities and Exchange Commission could have a significant impact on the price of Bitcoin. Matrixport’s analysis predicts a price range of $42,000 to $56,000 per unit if such an ETF is approved. Additionally, the report highlights the potential for a substantial increase in the market cap of stablecoin USDT and the overall inflow of capital into the cryptocurrency market. The market’s reaction to the news and the potential influx of institutional capital further demonstrate the significance of a spot Bitcoin ETF. As the crypto industry eagerly awaits the SEC’s decision, the prospect of a Bitcoin ETF continues to generate excitement and speculation among investors.