Galaxy Estimates 74% Surge for BTC with Spot Bitcoin ETF Approval
The financial investment firm Galaxy Digital anticipates that the approval of a spot-based bitcoin exchange-traded fund (ETF) will have a significant impact on the market. According to their estimates, this approval could drive a remarkable 74% increase in the price of Bitcoin within the first year after launch.
Spot Bitcoin ETF Approval to Drive Huge Capital Inflows
Galaxy Digital has shared its insights as the US securities regulator is currently reviewing multiple ETF proposals. The investment company's perspective is based on the potential benefits of a spot bitcoin ETF, which would provide investors with direct exposure to Bitcoin without requiring them to own the digital asset.
The investment firm is one of the first applicants in the race with an intent to issue the first spot bitcoin ETF in the United States, with regulatory clearance from the US Securities and Exchange Commission (SEC). They have published an analysis to measure the response to an exchange-traded fund tracking the price of the leading cryptocurrency.
Galaxy Digital is confident that a spot Bitcoin ETF could drive adoption due to two primary factors. Firstly, it would significantly broaden accessibility across various wealth segments, and secondly, the formal recognition by regulatory bodies and trusted financial service providers would lead to greater acceptance.
According to their research, Galaxy Digital estimates that in the first year following a spot bitcoin ETF launch, USD 14 billion could flow into the market. This figure is anticipated to grow to USD 27 billion in the second year and reach an impressive USD 39 billion by the third year.
Charles Yu, a research associate at Galaxy, expects a substantial 74% increase in the first year after the ETF's approval. This estimate is based on the price of USD 26,920 per Bitcoin recorded on September 30, 2023. It's important to note that Bitcoin has already surged to over USD 34,600.
While the SEC approved ETFs holding bitcoin futures in 2021, it has yet to approve a spot bitcoin ETF in the United States. Previous rejections were based on concerns about fraud, market manipulation, custody, and investor protection.
SEC Accepted Several Applications but Postponed Decision
This year, the regulator accepted several applications for review, including Galaxy Digital's partnership with Invesco. This partnership aims to challenge major financial firms like Blackrock in launching a spot Bitcoin ETF. However, the SEC has postponed its decisions on many of these applications.
Galaxy Digital, in an upbeat blog post, stated, "Anticipation that ETFs will be approved soon is rising, and our analysis suggests these products could see significant inflows, primarily driven by the wealth management channels that cannot currently access safe and efficient bitcoin exposure at scale."
The investment firm added, "Inflows from ETFs, market narratives about the forthcoming Bitcoin halving (April 2024), and the possibility that rates have peaked or will peak in the near term all suggest that 2024 could be a big year for Bitcoin."
Do you agree with Galaxy's estimations regarding the impact of a spot bitcoin ETF on the cryptocurrency market? Please share your thoughts and opinions in the comments section below.
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