Galaxy Digital predicts that the introduction of a spot-based Bitcoin exchange-traded fund (ETF) would draw substantial capital and drive BTC’s price up by 74% during the first year following its launch.
This projection coincides with growing expectations that the U.S. securities regulator may approve one or more of the ETF proposals currently under review.
Galaxy Digital Predicts Positive Impact of a Spot Bitcoin ETF
Galaxy Digital asserts that a spot Bitcoin ETF would offer investors direct exposure to Bitcoin without requiring them to possess the digital asset. They believe that gaining approval for this investment product, which offers certain advantages over current options, would accelerate adoption.
Galaxy Digital, one of the entities seeking approval from the U.S. Securities and Exchange Commission (SEC) to issue America’s first spot Bitcoin ETF, conducted an analysis to gauge the market for an ETF tracking the cryptocurrency’s price.
The firm anticipates that a spot Bitcoin ETF could significantly boost adoption for two key reasons: it would broaden access across different wealth segments and enhance acceptance through official recognition from regulatory bodies and trusted financial service providers.
According to their research, Galaxy Digital estimates that a Bitcoin ETF could attract $14 billion in the first year post-launch. This figure is projected to rise to $27 billion in the second year and $39 billion in the third year following the launch.
Charles Yu, a research associate at Galaxy Digital, also anticipates a 74% increase in Bitcoin’s price during the first year following ETF approval. This estimate is based on a Bitcoin price of $26,920 per coin recorded on September 30, 2023, while Bitcoin is currently trading at over $34,600.
SEC Delays Spot Bitcoin ETF Approvals While Anticipation Grows
In 2021, the SEC granted approval for ETFs holding Bitcoin futures, but it has yet to give the green light to a spot Bitcoin ETF in the U.S. Previous rejections cited concerns about fraud, market manipulation, custody issues, and investor protection.
Earlier this year, the regulator accepted several applications for review, including Galaxy Digital’s partnership with Invesco to compete with major financial firms like BlackRock. However, the SEC has delayed making decisions on many of these applications.
Galaxy Digital expressed in a blog post, “Anticipation that ETFs will be approved soon is rising, and our analysis suggests these products could see significant inflows, primarily driven by the wealth management channels that cannot currently access safe and efficient Bitcoin exposure at scale.”
The crypto investment firm concluded, “Inflows from ETFs, market discussions about the upcoming Bitcoin halving in April 2024, and the possibility of interest rates either having peaked or about to peak in the near term all indicate that 2024 could be a pivotal year for Bitcoin.”
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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