A recent study conducted by CryptoQuant, a renowned on-chain analytics firm, suggests that the introduction of spot Exchange Traded Funds (ETFs) for Bitcoin could significantly boost the cryptocurrency's market capitalization by a staggering $1 trillion.
While immediate ETF approval isn't expected, recent favorable court rulings in cases involving Grayscale's GBTC Fund and XRP against the SEC have increased the odds of approval by the final deadline in March 2024.
Upon the eventual approval of these ETFs, CryptoQuant foresees approximately $150 billion flooding into the Bitcoin market, potentially catapulting Bitcoin's market cap by anywhere from $450 billion to $900 billion. This growth is set to occur as more institutions and retail investors flock to the cryptocurrency.
CryptoQuant's argument is supported by the fact that new capital inflows during bullish phases result in an increase in realized cap as coins are exchanged at higher prices than their initial purchase. Simultaneously, the market cap experiences even more rapid growth due to the revaluation of market prices. Historical data reveals that during previous market peaks, such as December 2017, March, and November 2022, Bitcoin's market cap expanded three to nearly five times its realized cap, indicating that for every $1 of new investment, the market cap increased by $3 to $5.
The study also emphasizes that the expected surge in market capitalization would surpass the previous inflow of funds into the GBTC Fund during the last bull market cycle. GBTC stands as the largest Bitcoin fund, currently holding over 620,000 Bitcoins.
Furthermore, the analysis suggests that the anticipated increase in Bitcoin's market capitalization could lead to a substantial rise in its price, ranging from $50,000 to $73,000. This aligns with the views of crypto analyst "Robin C," who anticipates a potential influx of $150-200 billion into the world of Bitcoin on ETF approval.
Optimism is growing within the cryptocurrency community regarding the SEC's potential approval of various spot ETF filings from major financial players. Prominent names like BlackRock, Valkyrie, Wisdom Tree, Ark Invest, and Fidelity are in the spotlight. However, the timeline for the SEC's first spot Bitcoin ETF approval remains uncertain, given its proclivity for tightening cryptocurrency regulations.
As of now, Bitcoin is trading at $29909, with a week marked by modest gains, securing slightly over 5%. The cryptocurrency world eagerly awaits the potentially game-changing arrival of spot Bitcoin ETFs.