Bitcoin just made history. According to Wall Street analysts, the cryptocurrency could rise 230% to 340% by 2025

Bitcoin (BTC 0.53%) just made history. The US Securities and Exchange Commission (SEC) today approved the first spot Bitcoin ETFs, a watershed moment for Bitcoin and the broader cryptocurrency market.

In total, applications from 11 issuers received the green light from the SEC. Some of these issuers are listed below, along with their corresponding fund names and suggested ticker symbols.

• Ark Invest & 21Shares: Ark 21Shares Bitcoin ETF (ARKB)
• BlackRock: iShares Bitcoin Trust (IBTC)
• Loyalty: Wise Origin Bitcoin Fund (FBTC)
• Franklin Templeton: Franklin Bitcoin ETF (EZBC)
• Invesco & Galaxy: Invesco Galaxy Bitcoin ETF (BTCO)

The institutions listed above are particularly relevant as they collectively have more than $10 trillion in assets under management, meaning their spot Bitcoin ETFs are well-positioned to find traction with retail and institutional investors. In fact, with the exception of Ark Invest, every listed issuer is among the 15 largest asset managers in the world, and BlackRock is the largest single one.

Here's what investors should know:

The approval of spot Bitcoin ETFs is a significant event

The SEC began approving Bitcoin futures ETFs in 2021. However, these funds invest in Bitcoin futures contracts, which are agreements to buy or sell the cryptocurrency at a predetermined price on a predetermined date. In other words, Bitcoin futures ETFs do not directly own Bitcoin and therefore do not closely track its price. For example ProShares Bitcoin Strategy ETF (NYSEMKT:BITO) – the largest Bitcoin futures ETF – returned 103% last year, but Bitcoin itself rose 170%.

Spot Bitcoin ETFs work differently. Issuers will buy Bitcoin to build the fund and sell shares on the stock exchange. These stocks will closely track the price of Bitcoin, allowing investors to invest directly in the cryptocurrency without having to purchase or store it. By removing barriers to entry, spot Bitcoin ETFs could attract more investors and capital to the market, driving up the price of Bitcoin.

In fact, analysts at Bernstein believe that Bitcoin could triple in value by the end of 2025, and analysts at Standard Chartered Bank believe that its price could quadruple during that period. Other financial experts predict even greater upside potential.

Spot Bitcoin ETFs could drive demand among retail and institutional investors

Asset prices are a function of supply and demand. Bitcoin is no different. However, with supply capped at 21 million coins, demand is virtually the only variable that matters. In other words: Whether Bitcoin becomes more or less valuable in the future depends entirely on whether demand increases or decreases.

The historic approval of spot Bitcoin ETFs could lead to a gradual increase in demand, especially if large financial institutions such as BlackRock and Fidelity participate as issuers. Spot Bitcoin ETFs will significantly reduce friction. Investors no longer need to create accounts on cryptocurrency exchanges and deposit funds, nor do they need to worry about storing Bitcoin in a blockchain wallet. Instead, they have the option to add their Bitcoin exposure to existing portfolios through traditional brokers.

With this in mind, Bernstein analyst Gautam Chhugani believes that the spot approval of a Bitcoin ETF could push the price of Bitcoin to $150,000 by 2025, a 230% increase from the current price. Similarly, Geoff Kendrick of Standard Chartered Bank says the approval could push the price of Bitcoin to $200,000 by 2025. That means an upside of 340%.

The founder of SkyBridge Capital, Anthony Scaramucci, is even more optimistic. He believes that the immediate approval of a Bitcoin ETF could attract $100 billion in institutional investment, which could drive the price of Bitcoin to $330,000 in the not-too-distant future. This means an increase of 625% compared to the current price. Scaramucci pointed out that the BlackRock ETF is particularly compelling simply because BlackRock is the largest asset manager in the world.

As a word of caution, investors should never place too much emphasis on price targets and should keep in mind that cryptocurrencies are a volatile asset class subject to regulatory uncertainty. But the SEC's approval of spot Bitcoin ETFs removes some of that uncertainty, and the launch of such products could certainly bring more capital into Bitcoin and drive up its price over time.

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