Galaxy’s research underscores that a spot ETF would not only offer direct exposure to Bitcoin but also boast advantages over current investment options.
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As of Sep. 30, Bitcoin investment products held approximately 842k BTC, valued at around $21.7 billion. They currently come with notable disadvantages — high fees, low liquidity, tracking error, and limited accessibility.
A Bitcoin ETF, supporters say, offers benefits such as greater efficiencies in fees, liquidity, and price tracking, plus more convenience, and robust regulatory compliance.
A Bitcoin ETF would also be a game-changer for market adoption due to broader accessibility across wealth segments, and heightened acceptance due to formal recognition by regulators and esteemed financial brands, Galaxy claims.
The U.S. wealth management industry, which currently oversees assets worth $48.3 trillion, will likely be the primary beneficiary of an approved Bitcoin ETF, the firm notes.
With accessibility projected to increase significantly over the next three years, Galaxy estimates the addressable market size of a US Bitcoin ETF to be approximately $14 trillion in the first year, surging to $39 trillion by the third year.
If Bitcoin is embraced by 10% of the total accessible assets in each wealth channel with an average allocation of 1%, it could lead to inflows of $14 billion into a Bitcoin ETF in the first year post-launch, Galaxy predicts.
This could ramp up to $39 billion by the third year.
Gold Comparisons: Galaxy’s analysis also suggests that a similar amount of fund inflows would have an 8.8 times more significant impact on Bitcoin markets than gold markets. By applying the year-one estimate of $14.4 billion inflows into the historical relationship between gold ETF fund flows and the change in gold price, the fund predicts a 6.2% price surge for BTC in the first month.
This could culminate in a 74% increase in BTC in the first year post-ETF approval, considering the BTC price as of Sep. 30, stands at $26,920.
With the possibility of significant inflows primarily from wealth management channels, combined with market narratives about the forthcoming Bitcoin halving in April 2024, Galaxy hints that 2024 could indeed be a monumental year for Bitcoin.
Produced in association with Benzinga
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