Galaxy Foresees Stellar 74% Bitcoin Price Surge In Post-ETF Debut Year
October 25 2023 - 3:05AM
NEWSBTC
Galaxy Digital, a leading player in the digital assets sphere, has
issued a bullish prediction for Bitcoin’s trajectory following the
launch of the much-anticipated US-regulated spot Bitcoin ETF.
According to a recent study published by the firm on October 24,
the introduction of the ETF is set to considerably bolster
Bitcoin’s adoption, positioning it more firmly as a recognized
asset class. Advantages Of An ETF Galaxy’s analysis highlights that
a spot Bitcoin ETF would be “one of the most impactful catalysts
for the adoption of Bitcoin (and crypto as an asset class).” By the
end of September, Bitcoin assets held across diverse investment
products like ETPs and closed-end funds touched an impressive
figure of 842,000 BTC, valuing approximately $21.7 billion. Galaxy
Digital’s study also sheds light on the challenges faced by these
investment avenues, pointing to factors like high fees, tracking
errors, limited liquidity, and a somewhat constrained reach amongst
broader investor groups. The introduction of the spot Bitcoin ETF,
the report suggests, is poised to change this scenario
dramatically. Related Reading: From $35,000 To $500,000? The
Bitcoin Rollercoaster This Expert Sees Ahead Spot Bitcoin ETFs
offer a multitude of benefits over the current structures: an
improved fee system, greater liquidity, better price tracking, and
a much-needed break from the complications of self-custodying
assets. As the report explicitly states, “The presence of a
US-regulated spot Bitcoin ETF that adheres to strict regulatory
compliance not only provides a more secure platform but also
elevates its transparency, making it a preferable choice over
existing investment products.” Why A Spot Bitcoin ETF Matters
Galaxy believes that the introduction of a Bitcoin ETF would
increase the digital asset’s “accessibility across wealth segments”
and establish “greater acceptance through formal recognition by
regulators and trusted financial services brands.” The report
highlights the disparity between age groups when it comes to
Bitcoin investments. It reveals that while Boomers and older
generations hold 62% of US wealth, only 8% of adults aged 50 and
above have invested in cryptocurrency. Related Reading:
MicroStrategy’s Bitcoin Portfolio Soars Past $5 Billion As BTC
Holds Firm At $34,000 Galaxy sees regulatory approval for a Bitcoin
ETF as a significant step towards establishing Bitcoin as a
mainstream investment. An ETF could help reduce market volatility
by offering “greater price transparency and discovery for market
participants.” Estimating Inflows From ETF Approval Galaxy’s
forecast suggests the US wealth management sector, managing a
combined asset worth $48.3 trillion, will be the most impacted by a
Bitcoin ETF’s launch. They estimate potential inflows into the
Bitcoin ETF to be around $14 billion in the first year, escalating
to $27 billion in the second year and reaching $39 billion by the
third year. Factoring in the historical relationship between gold
ETF fund flows and gold price change, Galaxy predicts a potential
price increase of 6.2% for BTC in the first month after an ETF’s
launch. They project this to taper down to +3.7% by the last month
of the first year, resulting in an estimated +74% increase in BTC
in the first year of an ETF approval. At the current price, this
would mean that BTC could rise above $59,000 in the post-ETF debut
year. The Bigger Picture Beyond the potential inflows into a US ETF
product, Galaxy predicts that there will be a much larger impact on
BTC demand “from second-order effects”. The potential approval of a
spot ETF in the US might instigate similar products in other global
markets. Moreover, Galaxy expects that various other investment
vehicles, like mutual funds and private funds, will integrate
Bitcoin into their strategies. Galaxy suggests the potential for
Bitcoin’s Total Addressable Market (TAM) to grow substantially,
perhaps encroaching on traditional asset sectors like real estate
and precious metals. The estimated potential new inflows into BTC
could range between $125 billion to $450 billion “over an extended
period.” Featured image from Shutterstock, chart from
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