- Bitcoin broke the $27,000 mark, sparking market optimism.
- Analysts suggested that potential approval of Bitcoin spot ETF could increase market cap by $1 trillion.
After a long wait, Bitcoin [BTC] eventually surpassed the critical price threshold of $27,000, an event that sparked excitement among traders and long-term holders alike. It wasn’t just the break above this significant resistance level that fueled optimism; the long-awaited approval of Bitcoin Exchange-Traded Funds (ETFs) added another layer of excitement to the market.
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Make it a trillion
Additionally, an analysis from CryptoQuant suggested that the potential adoption of Bitcoin spot ETFs could add as much as $1 trillion to Bitcoin’s market cap.
This analysis expected that approximately $155 billion could flow into the BTC market once these ETFs receive approval.
To put these numbers into perspective, it is important to recognize the extent of traditional financing that Bitcoin will tap into. The companies responsible for these ETFs have a combined total assets under management (AUM) of approximately $15.6 trillion.
An allocation of 1% of their assets under management into Bitcoin ETFs alone could inject almost $155 billion into the market, which amounts to almost a third of King Coin’s current market capitalization.
Source: Cryptoquant
The mechanisms of how new capital entering the market affects Bitcoin’s market capitalization were evaluated. Analysts mainly looked at changes in realized capitalization.
It is a measure of the total value of all circulating BTC, based on the price at which each coin was initially acquired. As new money enters the market and BTC is acquired at prices higher than the previous owner’s purchase price, the realized capitalization increases.
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Still a long way to go
A historical analysis showed the evolution of Bitcoin’s market capitalization and realized capitalization. This data provided insight into the statistics during the peak periods of 2013, 2017 and 2021.
According to the most recent data, Bitcoin’s market capitalization was $545 billion, a significant jump from the $396 billion in realized capitalization.
At the time of writing, Bitcoin was trading at $29,800. Despite the price increase, BTC’s velocity dropped significantly. This implied that the frequency with which BTC was traded had decreased.
Moreover, the number of BTC holders also decreased during the same period. This could indicate that the price of BTC could remain within this range for some time.
Source: Santiment
