Galaxy Expects Spot Bitcoin ETF to Boost BTC by 74% in First Year
According to Galaxy Digital, a spot-centered bitcoin exchange-traded fund (ETF) will attract significant capital and increase the BTC price by 74% in the first year after launch. The forecast comes as expectations grow that the continuation of U.S. securities will approve one or more of the proposals currently under consideration.
Galaxy Digital Sees $39 Billion Inflows in Third Year Following Bitcoin ETF Launch
Galaxy Digital says spot Bitcoin ETF adoption is significant and believes this adoption will be strongly influenced by two key factors:
- Expanded Accessibility Across Asset Segments: A spot Bitcoin ETF provides users with direct exposure to Bitcoin without the need to own the digital asset. This could make it easier for more investors to access Bitcoin, just as ETFs seen in traditional financial markets serve a similar function. However, Bitcoin may be accepted by a wider range of investors.
- Regulatory Recognition and Trusted Financial Services Providers: Approval of a spot Bitcoin ETF indicates official recognition by institutions. This provides assurance of security and ensures the orderly maintenance of financial markets. Additionally, having reliable financial service providers handle the management of this type of ETF can help investors feel more secure.
Galaxy Digital thinks the adoption of such an ETF will accelerate Bitcoin adoption. But the benefit is that the approval and impact of such an ETF is entirely dependent on the SEC and market conditions. Cryptocurrencies and digital assets still have volatility and risks, so it’s important to be careful and do research before investing.
According to estimates based on research studies by Galaxy Digital, $14 billion is expected to be invested in the ETF in the first year following the launch of a Bitcoin ETF. This amount is expected to reach 27 billion in the second year, and 39 billion in the third year.
Galaxy’s research fellow Charles Yu, who also authored the article, expects the Bitcoin (BTC) price to rise 74% in the first year after ETF approval. This prediction shows Charles Yu reaching a price range of 26,920 per coin on September 30, 2023. You stated that its current price is over $34,600. This shows that market conditions can change rapidly and the performance of predictions may vary over time.
Although the SEC (US Securities and Exchange Commission) has approved ETFs holding Bitcoin futures in 2021, it has not yet approved a spot (instant delivery)-based Bitcoin ETF in the US. The SEC has previously rejected such ETF proposals due to risks of fraud, market manipulation, and concerns about custody and investor protection.
Earlier this year, the SEC agreed to review a number of filings by companies seeking to compete with major financial firms, including Galaxy Digital. They have applied for cryptocurrency ETFs, especially with big names such as Invesco. However, the SEC may still investigate and delay decisions on many of these applications.
According to Galaxy Digital’s blog post, the likelihood of cryptocurrency ETFs being approved in the near future is increasing, and the accumulation of this approval creates large investments originating from asset management channels that currently cannot access Bitcoin safely and efficiently. In this case, it could facilitate access to cryptocurrencies for more institutional and retail investors.
Additionally, Galaxy Digital suggests that 2024 could be a big year for Bitcoin, with investments from ETFs combined with market narratives around Bitcoin’s upcoming halving event (April 2024) and factors such as rates approaching or likely to peak. This could be an important period for cryptocurrencies and could have an impact on the value of Bitcoin.