A recent report from the crypto financial services platform Matrixport suggests that the approval of BlackRock’s Bitcoin Exchange Traded Fund (ETF) could propel the price of Bitcoin (BTC) to the range of $42,000 to $56,000.
The Impact of BlackRock’s ETF Approval on BTC Price
These projections are not just a result of speculation. Historically, the approval of traditional ETFs has often coincided with increased investor interest and significant price appreciation for the underlying assets. The report highlights that an ETF would provide an easier and more regulated entry point for institutional investors, which could lead to an influx of capital into the Bitcoin market.
One key indicator of the crypto market’s resurgence is the performance of Grayscale Investments’ Bitcoin Trust, GBTC. As of the report’s publication, GBTC’s share prices had remarkably surged by 167% year-to-date, significantly outperforming Bitcoin’s 71% growth during the same period. This impressive performance suggests growing institutional interest in the crypto space.
While GBTC’s performance was already noteworthy, the real game-changer came when BlackRock Inc (NYSE: BLK) announced its ETF application in June. This announcement sent ripples through the crypto market and has the potential to further transform the landscape.
Matrixport’s analysis suggests that if Tether’s (USDT) market cap increases by $24 billion, acting as a proxy for potential ETF inflows, Bitcoin’s price could rise to $42,000, representing a conservative estimate.
However, if a more substantial influx of $50 billion occurs due to the 1% allocation recommendation by RIAs, Bitcoin could potentially rally to $56,000. These estimates are based on the assumption that the Bitcoin ETF would attract significant institutional interest and investment, which, in turn, would boost the overall market capitalization and price of Bitcoin.
RIAs and the Potential for Massive Inflows
Matrixport’s earlier reports had already analyzed the 15,000-strong US Registered Investor Advisor (RIA) community, which oversees around $5 trillion in assets. This community holds immense potential for influencing investment decisions and asset allocation strategies. The report projected that even a modest 1% allocation recommendation for Bitcoin by RIAs could usher in around $50 billion in inflows into the crypto market.
Drawing a parallel with precious metals ETFs, which have a market cap of approximately $120 billion, and assuming that between 10-20% of precious metal ETF investors would consider a Bitcoin ETF to diversify their portfolios and hedge against monetary debasement and inflation, the crypto market could potentially witness substantial inflows. This projection suggests that the Bitcoin ETF could attract between $12-24 billion in investments.
While the crypto community eagerly awaits the approval of a spot Bitcoin ETF, Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC) recently highlighted in an interview that these applications are more than just formality. Instead, they are subjected to extensive review and deliberation within the SEC’s many divisions.
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