CryptoQuant has revealed in its latest report that Bitcoin’s market cap could increase by as much as $1 trillion following the launch of its spot ETFs.
Bitcoin could see a 165% increase when the Spot ETFs launch
Yesterday, fake news about the approved iShares Bitcoin spot ETF took the sector by storm, while all cryptocurrencies saw sharp rallies. At the peak of this rise, BTC had approached the $30,000 level.
However, when the market realized the truth about the announcement, assets quickly returned to pre-rally levels. While the gains were short-lived, the rally nonetheless provided a preview of the strong market reaction to expect to the launch of a real ETF.
This was just one spot ETF; However, several others are waiting in line to be approved. What would the market look like if all these ETFs were launched? In his new one reporton-chain analytics company CryptoQuant has discussed just that.
The assets under management of the various companies waiting for 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).
“While these ETFs are not expected to be approved this year, the likelihood that they will be approved before the final deadline (March 2024) has increased due to favorable court rulings for Grayscale (GBTC Fund) and XRP in their respective regulatory provisions. fight the SEC,” the company said.
In total, these companies’ assets under management are approximately $15.6 trillion. If they were to put just 1% of this amount towards BTC, it would mean an inflow of as much as $155 billion into the asset. “To put it in context, these amounts represent almost a third of Bitcoin’s current market capitalization,” CryptoQuant notes.
How this capital influx could impact BTC’s market capitalization is not exactly easy to say. In general, market capitalization increases by more than just the raw capital coming into the cryptocurrency.
The company used the realized cap measure to assess 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 the same as the price at which it last traded on the blockchain.
The realized limit can be represented as the total investment of the investors, taking into account the prices at which everyone bought their coins. The graph below shows how this realized cap has compared to the market over the years.
The comparison between the trends of the realized cap and market cap | Source: CryptoQuant
The chart shows that market cap and realized capitalization tend to have noticeably different growth rates because they have always followed quite different paths.
CryptoQuant has calculated the ratio between the annual growth of the two ceilings and found that for most of the asset’s history, market capitalization has grown three to six times faster than realized capitalization.
If the realized cap grows by $155 billion when spot ETFs are approved and asset managers allocate 1% of their assets under management to Bitcoin, the market cap could grow by between $450 and $900 billion.
The report notes that this figure implies that “market capitalization would rise between 82% and 165% from current levels and Bitcoin’s price could rise between $50,000 and $73,000 as a result of this influx of fresh money.”
BTC price
Bitcoin has been on an uptrend in recent days as its value has now climbed 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
