The possible imminent introduction of Bitcoin spot ETFs in the US has been causing price fantasies among Bitcoin investors for weeks. A huge upward move is widely expected. Crypto investment firm Galaxy is getting more specific and calculating how high Bitcoin could rise in the year following a potential spot ETF launch.
• Bitcoin Spot ETF Hopes Cause Price Fantasy: Bitcoin in Bullish Mode
• Galaxy sees significant increase in demand with introduction of spot ETFs
• Experts then expect Bitcoin to rise 74.1%
Bitcoin is performing impressively this year. Just in time for the start of the year, the original cyber currency began a rapid recovery. On October 24, Bitcoin surpassed $35,000 for the first time since May 2022. At its current level of $36,471, Bitcoin is up a good 123% over the year (as of November 14, 2023). This means that the largest cryptocurrency has performed significantly better than most other cybercurrencies. For example, Ether is up around 74% since January, while Ripple’s annual profits have so far been up 96%.
Hopes to launch a Bitcoin spot ETF in the US
A major reason for Bitcoin’s outperformance is speculation surrounding the imminent introduction of a Bitcoin spot ETF in the US. In contrast to the already approved Bitcoin futures ETFs, spot ETFs are listed directly on the regular exchange and are based on real-time Bitcoin prices. Unlike the US, spot Bitcoin ETFs are already approved in Europe, so asset manager Jacobi Asset Management launched a corresponding financial product on August 15, 2023.
Hopes for approval of such a product in the US were fueled in early September when a US appeals court overturned the US Securities and Exchange Commission’s (SEC) block on a spot Bitcoin ETF. Therefore, it is no surprise that the number of global searches for Bitcoin has increased in recent weeks.
Galaxy: Bitcoin rises significantly with launch of spot ETF
The consequence of introducing a spot ETF will likely be a significant increase in demand for Bitcoins. The crypto sector would also take another step forward in terms of broad acceptance of the industry, which has only existed since 2008. However, the question now arises of to what extent the introduction of a Bitcoin spot ETF will specifically affect the price development of the original token .
Recently, Charles Yu, a research associate at crypto investment firm Galaxy, published a blog post on the subject. In it, Yu estimates the size of the entire Bitcoin ETF spot market to be $14.4 trillion in the first year after launch. According to his calculations, such a sum would translate into an increase in the price of Bitcoin of an impressive 74.1%.
He reached this specific conclusion by evaluating the potential price impact of inflows into Bitcoin ETF products based on experience with gold ETFs. Yu goes on to say that Bitcoin will rise 6.2% in the first month after the launch of a spot ETF. However, the momentum of the monthly upward trend will slow down; in the twelfth month, Bitcoin will increase by 3.7%, Yu speculates. The launch of a spot ETF will also have a positive impact in the following years: Yu expects the US Bitcoin ETF market capitalization to reach $26.5 billion in the second year after its launch and $39.6 billion in the third year. .
These other reasons could boost Bitcoin
At first glance, Yu’s predictions seem extremely optimistic – but the crypto expert is of the opinion that his estimates are still quite conservative and do not take “second-order effects” into account. For example, the US example could set a precedent. “In the near future, we expect other global/international markets to follow the US in approving and offering similar Bitcoin ETFs to a broader investor group,” says Yu. He added that “2024 could be a big year for Bitcoin.” In addition to the ETF inflows, Yu also highlights the Bitcoin halving in April 2024 and “the possibility that the policy rate has peaked or will peak in the near future.”
It remains to be seen whether Yu’s optimism will be justified. What is certain is that Bitcoin will make a surprising comeback in 2023, despite all the prophecies of doom.
finanzen.net editorial team