Crypto fund Galaxy Digital Expects a 74% spike in Bitcoin’s price in 2024 if a regulated Spot Bitcoin ETF is approved in the United States.
Galaxy’s research indicates that a spot Exchange Traded Fund (ETF) wouldn’t offer direct exposure to Bitcoin, but it would also boast ease-of-access advantages over current offerings.
As of September 30th, Bitcoin investment products held around 842,000 BTC, valued at roughly $21.7 billion. These products come with some disadvantages such as high fees, limited liquidity, tracking errors and accessibility issues.
On the other hand, Bitcoin ETF supporters tout benefits such as increased fee efficiency, better liquidity, accurate price-tracking and general convenience, besides regulatory clarity.
The main reason for a Spot Bitcoin ETF would be “expanded accessibility across wealth segments, and greater acceptance through formal recognition by regulators and trusted financial services brands,” said Galaxy researcher Charles Yu.
“Rather than relying on wealth managers, ETFs can be accessed by a wider scope of clients, including directly in brokerage or in RIAs (which prohibit direct purchasing of spot Bitcoin),” he said.
Beyond that, “Financial advisors and fiduciaries cannot consider Bitcoin in their wealth management strategies without an approved Bitcoin investment solution like a spot ETF,” Yu said. “The wealth management segment holds significant capital that has been unable to access Bitcoin investments directly through traditional channels – with an approved spot ETF, financial advisors can start to direct their wealth clients to invest in Bitcoin.”
Projected inflows following an ETF approval
According to Galaxy analysts, a similar amount of inflows that poured into the Gold ETF would have an 8.8 times more significant impact on Bitcoin markets than gold markets.
Researcher Charles Yu said:
With gold having an estimated ~24x larger market capitalization and 36% less supply held in investment vehicles compared to Bitcoin, we assume a dollar-equivalent amount of fund inflows having a ~8.8x greater impact on Bitcoin markets compared to gold markets. If we apply our year-one estimate of $14.4bn in inflows (~$1.2bn per month or ~$10.5bn on an adjusted basis using our 8.8x multiplier) into the historical relationship between gold ETF fund flows and change in gold price, we estimate a +6.2% price impact for BTC in the first month.
Given the recent BTC price of $26,920 as of September 30, this may result in a 74% increase in BTC in the first year following an ETF approval.
With the likelihood of significant capital inflows, mainly from wealth management channels, and market a focus on narratives about the upcoming Bitcoin halving in April 2024, Galaxy says that 2024 could be a watershed year for Bitcoin.
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