Bitcoin Exchange-Traded Funds (ETF) are generating a lot of expectation in the financial market, and Galaxy Digital predicts that these ETFs could attract at least $14.4 trillion in investments during their first year of issuance.
The adoption of Bitcoin as a conventional investment is the future that many envision. Compared to currently available products, such as trusts and Bitcoin futures, which have a combined value of over $21 billion, ETFs are considered a superior option for investors.
Galaxy provides highly optimistic projections for the ETF’s launch.
“We estimate that the addressable market size for a Bitcoin ETF in the United States will be approximately $14 trillion in the first year after launch, $26 trillion in the second year, and $39 trillion in the third year.”
These projections are based on the notion that Bitcoin ETFs will offer a set of key advantages.
Expectations and Impact of a Bitcoin ETF
First and foremost, they will allow investors to gain exposure to Bitcoin through highly regulated partners such as investment funds and banks with a strong track record of customer protection and investment offerings.
This regulation and oversight will provide an additional level of security for investors in the face of the volatility and lack of regulation in the cryptocurrency market.
Furthermore, Bitcoin ETFs are expected to enhance efficiency in terms of fees, liquidity, and price tracking when compared to existing products.
While specific fees have not been disclosed yet, ETFs, in general, tend to offer lower fees compared to hedge funds or closed-end funds, making them more attractive to investors.
Improved liquidity and more precise price tracking are also key benefits anticipated with Bitcoin ETFs.
The approval of these ETFs is expected to improve perceptions of Bitcoin and cryptocurrencies as legitimate assets, potentially increasing their adoption and acceptance.
Regarding the impact on the price of Bitcoin, an estimated 74% increase is projected in the first year, considering the liquidity and the price impact of billions of dollars in investments.
There are at least 12 ETF proposals awaiting approval, and experts believe and assert that they will become a reality by the end of this year or early next year.