CryptoQuant, a data analytics firm, has predicted that Bitcoin could become a $900 billion asset and the total cryptocurrency market could grow by $1 trillion if bitcoin spot exchange-traded funds (ETFs) are approved. The firm argues that while the first wave of institutional adoption in 2020-2021 saw institutions adding bitcoin to their balance sheets, the next wave could see financial institutions providing bitcoin access to their clients through spot ETFs.
CryptoQuant suggests that the potential inflow from spot ETFs could be significantly larger than the amount of money that entered the Grayscale Bitcoin Trust (GBTC) during the last bull market cycle. GBTC is currently the largest cryptocurrency fund in the world, with $16.7 billion in assets under management. Based on the issuers that have applied to list bitcoin ETFs, if they were to put 1% of their Assets Under Management (AUM) into these ETFs, approximately $155 billion could enter the bitcoin market. This would represent almost a third of bitcoin’s current market capitalization and could hypothetically push its price to between $50,000 and $73,000.
Furthermore, CryptoQuant notes that during previous bull markets, bitcoin’s market capitalization has grown 3-5 times more than its realized capitalization. This suggests that for every $1 of fresh money entering the bitcoin market, the market capitalization could increase by $3-$5.
The recent surge in Bitcoin’s price to $30,000, following a false report about a spot bitcoin ETF being approved, indicates the bullish sentiment surrounding the potential approval of ETFs. Some observers believe that this bullish price action will keep bears at bay for some time. Markus Thielen, head of research and strategy at Matrixport, stated that “nobody will dare to short BTC now for the foreseeable future. Even if this Cointelegraph news was false, BTC can still grind higher in anticipation of the approval.”
The continued narrowing of the GBTC discount, reaching its lowest in nearly two years, also reflects the positive sentiment in the market. The crypto market capitalization first crossed the $1 trillion mark in January 2021, with the total market cap currently standing at $1.13 trillion, with bitcoin accounting for over 50% of the tally.
In conclusion, if bitcoin spot ETFs are approved, the crypto market could see substantial growth, with Bitcoin potentially becoming a $900 billion asset and the total market cap increasing by $1 trillion. The anticipation of ETF approval has already sparked a bullish sentiment, and if historical patterns hold true, the influx of fresh money could significantly boost bitcoin’s market capitalization.