Why is the Bitcoin Spot ETF Important

Why Bitcoin Spot ETF Matters

The application for a Bitcoin spot ETF has garnered significant attention for two main reasons:

A successful approval of the Bitcoin spot ETF would cause a substantial increase in Bitcoin’s price, reaching a high of $35,000, with a potential rise of 25%-30%. Approval of the Bitcoin spot ETF signifies an expansion of compliant investment channels for cryptocurrencies. The Bitcoin spot ETF is expected to become the most popular cryptocurrency investment product among investors in 2023. Driving Price Increase If the Bitcoin spot ETF is successfully approved and launched, it will drive Bitcoin’s price to surge again, reaching a high of $35,000. The increase could be as much as 25%-30%.

The issuance of the Bitcoin spot ETF can attract a large amount of funds from traditional markets, channeling them into the Bitcoin market and increasing liquidity. This effectively opens a huge gap between the two markets, with funds continuously flowing into the Bitcoin market. The most direct result of this influx of liquidity is an increase in Bitcoin’s price.

So, roughly how much could the price increase be? Based on estimates, if all eight institutions’ applications are approved, Bitcoin’s market capitalization could grow by approximately 0.145 trillion. At that point, Bitcoin’s price could reach a new ATH, surpassing $35,000, with an increase of nearly 25%.

Note: In the estimation, we used the total assets of GBTC as a reference. Currently, GBTC’s total assets are approximately $18.3 billion. Based on this data, the liquidity that the 8 Bitcoin spot ETFs could bring to the Bitcoin market is roughly 0.145 trillion.

At the same time, the positive market sentiment generated by the launch of the spot ETF could potentially trigger large capital inflows. The entry of major whales would further push up Bitcoin’s price.

Expanding Compliant Investment Channels Another important significance of the successful approval of the Bitcoin spot ETF is its role in expanding compliant investment channels for cryptocurrencies.

Currently, compliant crypto investment products within the U.S. mainly consist of derivatives, with few compliant investment products based on spot cryptocurrencies. If the Bitcoin spot ETF is successfully issued, it will provide investors with a new compliant investment channel for cryptocurrencies and accelerate capital inflows.

According to a survey conducted earlier this year by Bitwise and VettaFi among financial advisors regarding cryptocurrency investments, over 68% of advisors prefer ETFs as a way to hold cryptocurrencies. Additionally, Bitcoin ranks as the most interesting crypto asset among financial advisors (41%).

Therefore, after its issuance, the Bitcoin spot ETF is expected to become the most popular cryptocurrency investment product among investors, incorporated into their asset portfolios.