- The likelihood of US spot ETF approval is on the rise, heralding substantial market inflows for BTC and ETH.
- Market analysis suggests a significant potential BTC rally to $42k, driven by robust inflows into BTC investment vehicles.
The realm of blockchain and cryptocurrency is buzzing with the prospects of US BTC ETFs (Bitcoin Exchange Traded Funds) and ETH (Ethereum) futures-based ETFs. Market analyst Vetle Lunde shares a compelling argument, claiming the market has largely underrated the impending impact of these financial instruments.
In this week’s Ahead of the Curve, we argued that BTC spot ETFs in the U.S. would amass at least 30k BTC worth of inflows in its first 10 days of trading, based on BITO launch flows and Purpose BTC’s inflows.
We also expect strong flows to ensue, with BTC investment vehicles… pic.twitter.com/dojuUEu9oZ
— Vetle Lunde (@VetleLunde) September 8, 2023
Optimistic Horizon for US Spot ETF Approval
Recent deliberations have highlighted a favorable atmosphere for US spot ETF approval. These ETFs provide a mainstream channel for investments in Bitcoin, significantly broadening the asset’s investor base. Despite the market trading at pre-BlackRock announcement levels, indicators suggest a remarkable underestimation of US BTC ETFs’ potential.
Drawing a comparison, Lunde references the Canadian market, where the launch of the Purpose Bitcoin ETF led to inflows of 11,141 BTC, followed by a series of ETF launches amounting to 58k BTC inflows within the initial four months. With a vastly larger addressable market, the US is poised for a more significant inflow, potentially triggering a notable market movement.
Solidifying the Flow-Market Relationship
Illustrating the impact of investment flows on market dynamics, a noteworthy relationship is depicted between robust net inflows into BTC investment vehicles and market strengthening. Analysis showcases an average 30-day return of 8.2% on BTC when the inflows are on an uptrend, compared to a mere 2.4% during downtrends. Extreme inflows have historically elevated the market, revealing the potential energy stored for an imminent market surge.
Lunde’s review in “Ahead of the Curve” speculates that US BTC spot ETFs could attract at least 30k BTC in inflows within the first ten days of trading, paralleled by BITO launch flows and Purpose BTC’s inflows. Forecasting further, a four-month inflow growth ranging between 70-100k BTC is anticipated, driven by US spot ETFs and growing inflows to ETPs (Exchange Traded Products) domiciled abroad.
With a naïve market impact estimation, a picture of a 66% BTC rally to $42k is painted, underscored by data-backed simulated trajectories. Although this projection disregards other possible market-influencing events, it forms a riveting insight into the potent market dynamics awaiting unsealing with the advent of US BTC ETFs.