CryptoQuant has revealed in its latest report that the Bitcoin market cap could increase by up to $1 trillion following the launch of the spot ETFs.
Bitcoin could see a 165% surge as spot ETFs hit the market
Yesterday, fake news about iShares’ approved Bitcoin spot ETF took the sector by storm as all cryptocurrencies posted strong rallies. At the peak of this rise, BTC was approaching $30,000.
However, as the market realized the truth about the announcement, the asset quickly fell back to the levels it was at before the rally. Although the gains were short-lived, the rally still provided a glimpse of the strong reaction the market could see to the launch of a true ETF.
This was just a spot ETF; However, several others are waiting in line for approval. What would the market look like if all of these ETFs were launched? In its new report, on-chain analytics firm CryptoQuant discussed exactly that.
The assets under management of the various companies awaiting ETF approval | Source: CryptoQuant
The table above shows information about the various companies awaiting approval for the Bitcoin spot ETF, including the total size of their assets under management (AUM).
“Although these ETFs are not expected to be approved this year, the likelihood of them being approved by the final deadline (March 2024) has increased due to the positive court rulings for Grayscale (GBTC Fund) and XRP in their respective jurisdictions.” Fight against the SEC,” the company says.
In total, these companies have around $15.6 trillion in assets under management. If they put just 1% of that amount into BTC, that would represent a whopping $155 billion inflow into the asset. “For comparison, these amounts represent almost a third of Bitcoin’s current market capitalization,” notes CryptoQuant.
Now, it’s not entirely easy to say how this capital inflow might impact BTC’s market cap. In general, market capitalization increases by more than just the raw capital flowing into the cryptocurrency.
The Company used the realized cap metric to evaluate this relationship. The realized cap is a capitalization method for BTC that calculates its total value by assuming that the value of each coin is equal to the price at which it was last traded on the blockchain.
The realized cap can be thought of as the total investment of investors, taking into account the prices at which each purchased their coins. The chart below shows how this realized cap has performed over the years compared to the market.
The comparison between realized capitalization and market capitalization trends | Source: CryptoQuant
The graph shows that market capitalization and realized capitalization tend to have significantly different growth rates because they have always followed quite different paths.
CryptoQuant calculated the ratio between the annual increases of the two caps and found that the market capitalization has grown three to six times faster than the realized cap for most of the asset’s history.
If the realized cap increases by $155 billion when spot ETFs are approved and asset managers invest 1% of their AUM in Bitcoin, the market cap could grow by $450 billion to $900 billion.
The report notes that this figure suggests that “the market cap would increase by 82% to 165% from current levels and that the Bitcoin price could reach between $50,000 and $73,000 due to these inflows of fresh money.”
BTC price
Bitcoin has seen some upside in recent days as the asset has now risen above the $28,500 level.
BTC has seen some growth recently | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com, CryptoQuant.com
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