- The introduction of Bitcoin spot ETFs could potentially boost the cryptocurrency’s value, with over $27 trillion in client assets potentially poised to invest.
- The launch of Bitcoin spot ETFs by major institutions like BlackRock and Fidelity could significantly influence Bitcoin’s price and overall market capitalization.
The recent surge in Bitcoin’s price has sparked speculation that the introduction of spot Exchange Traded Funds (ETFs) could propel it even higher. Notably, spot ETFs from esteemed financial institutions like BlackRock and Fidelity could instill confidence in institutional investors, potentially prompting a significant uptick in Bitcoin’s value.
Meltem Demirors, CoinShares’ Chief Strategy Officer, recently highlighted that more than $27 trillion in client assets from major financial institutions are currently on the periphery of the cryptocurrency market. If even a small fraction of this was channeled into Bitcoin spot ETFs, the ramifications on its price could be enormous. Just 1% of these client assets equates to over $270 billion, dwarfing Bitcoin’s current market cap of $590 billion.
In fact, a glimpse into the potential future of Bitcoin could be inferred from the performance of gold following the launch of the first gold ETF in November 2004. The price of gold soared from $400 at the time of the ETF’s approval to almost $2,000 in 2011, marking a 359% increase.
Just like gold, Bitcoin — often referred to as the digital gold of the 21st century — has a considerable market cap of $590 billion. However, this pales in comparison to gold’s market cap of approximately $12 trillion. If Bitcoin were to attain just 10% of gold’s market cap, it would result in a doubling of its current value, a target that seems attainable given Bitcoin’s previous all-time high of around $67,000 at the end of 2021.
When compared to the total market cap of the global stock market, currently exceeding $100 trillion, Bitcoin’s market cap appears even more modest. Bitcoin’s capitalization is just a fifth of Apple’s, which accounts for approximately 3% of the global stock market.
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However, it’s crucial to consider the supply side when assessing Bitcoin’s potential price surge. According to Alessandro Ottaviani, an expert in the field, if BlackRock and Fidelity were to allocate just 0.3% of their managed capital to Bitcoin, they would be able to purchase all available BTC on exchanges at the current price.
Glassnode’s on-chain analysis revealed that there’s a steady shift of wealth to HODLers, with an increasing number of coins being withdrawn from exchanges. Currently, there are only 2.28 million BTC left on exchanges, 2.65 BTC held by short-term holders, and 14.47 BTC held by long-term holders.
While these metrics suggest a potential bull run for Bitcoin led by institutions, this outcome is not guaranteed. There’s always the possibility that the U.S. Securities and Exchange Commission may reject Bitcoin spot ETFs. Moreover, BlackRock and other potential buyers need to purchase BTC on the spot market for the price to be directly impacted.
Despite these hurdles, the potential for spot ETFs to boost Bitcoin’s value is considerable. As it stands, the BTC price sits at $30,388.
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