Galaxy Digital Predicts 74% Increase in Bitcoin (BTC) Price During First Year of Spot Bitcoin ETF Launch
Galaxy Digital, a prominent investment company, has projected that the introduction of a spot-based bitcoin exchange-traded fund (ETF) could result in a substantial influx of capital and a remarkable 74% surge in the price of Bitcoin during the initial year post-launch. This forecast comes amidst growing expectations that the U.S. Securities and Exchange Commission (SEC) will grant approval to one or more of the currently pending ETF proposals.
A spot bitcoin ETF offers investors direct exposure to Bitcoin’s price movements, eliminating the necessity to possess the digital asset itself. The approval of such an investment product carries several advantages over existing options and is expected to catalyze its widespread adoption, according to Galaxy Digital.
Galaxy Digital, an applicant seeking to issue America’s inaugural spot bitcoin ETF with regulatory authorization from the SEC, has conducted an in-depth analysis to gauge the potential market size for an ETF tracking Bitcoin’s price.
Galaxy believes that a spot bitcoin ETF will have a profound impact on adoption, primarily attributed to two key factors: increased accessibility across various wealth segments and enhanced legitimacy through formal recognition from regulatory bodies and trusted financial service providers.
Drawing from its research findings, Galaxy Digital estimates that in the inaugural year following the ETF launch, approximately $14 billion will flow into the bitcoin ETF. This figure is expected to rise to $27 billion in the second year and further increase to $39 billion by the third year following the launch.
Charles Yu, a research associate at Galaxy, predicts that the price of Bitcoin (BTC) will experience a remarkable 74% surge within the first year following the approval of the ETF. This estimate is based on the Bitcoin price of $26,920 per coin recorded on September 30, 2023. It’s worth noting that, as of the time of writing, Bitcoin is trading at over $34,600.
It’s important to highlight that while the SEC previously approved ETFs holding bitcoin futures in 2021, the green light for a spot bitcoin ETF in the United States has not yet been granted. Past rejections were attributed to concerns regarding the potential for fraud, market manipulation, custody, and investor protection.
Earlier this year, the SEC initiated a review of several applications, including that of Galaxy Digital, which partnered with Invesco to compete with major financial institutions like Blackrock in launching a spot bitcoin ETF. However, decisions on many of these applications have been postponed.
In conclusion, Galaxy Digital has expressed rising optimism about the imminent approval of ETFs and the significant inflows these products could attract, particularly driven by wealth management channels that currently lack access to secure and efficient bitcoin exposure at scale. Additionally, the confluence of ETF inflows, discussions surrounding the forthcoming Bitcoin halving in April 2024, and the possibility of peaking interest rates in the near term all point towards 2024 as a potentially pivotal year for Bitcoin.
The question of whether one agrees with Galaxy’s estimates regarding the impact of a spot bitcoin ETF on the crypto market is open for discussion in the comments section below.
Frequently Asked Questions (FAQs) about Bitcoin ETF Impact
What is the significance of a spot-based Bitcoin ETF?
A spot-based Bitcoin ETF allows investors direct exposure to Bitcoin’s price without owning the digital asset. It offers advantages over other investment options, potentially boosting Bitcoin’s adoption.
Why is Galaxy Digital making predictions about the impact of a Bitcoin ETF?
Galaxy Digital is an applicant for America’s first spot Bitcoin ETF. They conducted market analysis to estimate potential inflows and price impacts, which can inform investors and stakeholders.
Has the SEC approved a spot Bitcoin ETF in the U.S. before?
No, as of now, the SEC has not approved a spot Bitcoin ETF in the United States. Previous rejections were due to concerns about fraud, market manipulation, custody, and investor protection.
How much capital is Galaxy Digital predicting to flow into a Bitcoin ETF in the first year?
Galaxy Digital estimates approximately $14 billion could flow into a Bitcoin ETF in the initial year after launch, with projections of $27 billion in the second year and $39 billion in the third year.
What is the basis for the 74% price increase prediction for Bitcoin?
The 74% price increase estimate is based on the Bitcoin price of $26,920 per coin as of September 30, 2023. This projection assumes approval of the spot Bitcoin ETF.
What factors could contribute to a significant year for Bitcoin in 2024?
Galaxy Digital cites inflows from ETFs, discussions about the upcoming Bitcoin halving in April 2024, and potential shifts in interest rates as factors indicating that 2024 could be significant for Bitcoin.
More about Bitcoin ETF Impact
- Galaxy Digital
- U.S. Securities and Exchange Commission (SEC)
- Bitcoin ETF
- Bitcoin Price
- Bitcoin Halving