It was speculated that $155 billion could flow into the Bitcoin market upon clearance of the spot Bitcoin ETFs.
spot ETF applications, in the hopes that it would spur the next wave of investments in the space and free it from the grip of the extended bear market.Invest and 21Shares were the early movers when it came to filing for a spot Bitcoin ETF. The pair filed the application earlier in April, followed in June by a rush of applications from other TradFi giants such as BlackRock, the world’s largest digital asset manager.
A Bitcoin ETF allows investors to gain exposure to the price movements of Bitcoin without actually owning the asset directly. Unlike a futures ETF, which is already in place, a spot ETF involves holding Bitcoin as its underlying asset. So, when investors purchase shares of a spot ETF, they are essentially buying a representation of actual Bitcoin.
Having said that, can we evaluate the quantitative impact of these financial instruments on the market value of Bitcoin?The company arrived at the said figure by assuming a 1% allocation of the asset managers’ total assets under management – roughly $15.6 trillion – in spot ETFs. This was evidenced by the graph below. During the bull markets of 2017 and 2021, the market cap grew between three to five times higher than the realized cap.This relationship, termed as the MarketCap-RealizedCap Elasticity, has remained in the range of 3-6 during bull markets. Based on this, it was predicted that Bitcoin’s market cap would rise between $450 to $900 billion if $150 billion was invested in the market via spot ETFs.
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