November 30, 2023

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CryptoQuant Says Bitcoin (BTC) ETF Approvals Could Add $1 Trillion to Cryptocurrency Market Cap

CryptoQuant Says Bitcoin (BTC) ETF Approvals Could Add $1 Trillion to Cryptocurrency Market Cap

Bitcoin will become a $900 billion asset, and the total cryptocurrency market will grow by $1 trillion, if bitcoin exchange-traded funds (ETFs) are approved, data analytics firm CryptoQuant wrote in a recent report.

The first wave of institutional adoption in 2020-2021 came from institutions adding Bitcoin to their balance sheets, while the next wave could be financial institutions providing access to Bitcoin to their clients through spot ETFs, CryptoQuant said in the report.

The potential inflow from spot ETFs will be much larger than the money that went into the Grayscale Bitcoin Trust (GBTC) in the last bull market cycle. GBTC is the world’s largest cryptocurrency fund, with assets under management currently standing at $16.7 billion. Cryptocurrency Group is the parent company of Grayscale and CoinDesk.

CryptoQuant says that if issuers who have applied to list Bitcoin ETFs put 1% of their assets under management (AUM) into these ETFs, approximately $155 billion could enter the Bitcoin market. This represents approximately one-third of Bitcoin’s current market value. If this scenario occurs, it should push the price of Bitcoin to between $50,000 and $73,000.

Historically, during previous bull markets, Bitcoin’s market cap has increased 3-5 times more than its realized market capitalization. This suggests that for every $1 of new money entering the Bitcoin market, the market capitalization could increase by $3 to $5, CryptoQuant added.

Bitcoin recently temporarily jumped to $30,000 after Cointelegraph published a false report about the approval of a Bitcoin exchange-traded fund. According to some observers, the frenetic upward price action should keep the bears at bay for some time.

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“No one would dare short sell Bitcoin now for the foreseeable future,” Markus Thelen, head of research and strategy at Matrixport, said in a Telegram broadcast. “Even if this Cointelegraph news is false, Bitcoin can still rise in anticipation of approval.”

Bullish sentiment is also evident from the continued narrowing of the GBTC discount to its lowest level in almost two years.

The market cap of cryptocurrencies crossed the $1 trillion mark for the first time in January 2021. At the time of publication, the total market cap stood at $1.13 trillion, with Bitcoin accounting for more than 50% of the number.