The cryptocurrency market is on the brink of an exciting paradigm shift, and Bitcoin exchange-traded funds (ETFs) are the driving force behind this transformation.
According to recent reports from CryptoQuant, it discusses in detail how the approval of Bitcoin ETFs could boost the growth of the Bitcoin market by approximately $900 billion and, even more shockingly, the crypto market as a whole could expand by $1 trillion.
The entry of a new wave of institutional investment
The next wave of institutional Bitcoin adoption is expected to come from spot market ETFs. Although these approvals are not expected to materialize before March 2024, their likelihood of approval has increased due to favorable court rulings for Grayscale (GBTC Fund) and XRP in their respective legal battles against the Securities and Exchange Commission (SEC).
It is estimated that around $150 billion will flow into the Bitcoin market once these spot market ETFs are approved. The report also suggests that based on the historical relationship between total market capitalization and realized capitalization of Bitcoin, if $150 billion of new money enters the Bitcoin market, it could increase Bitcoin’s market capitalization in the range of $450 to $900 billion.
The report highlights that the inflow of fresh money into the Bitcoin market through these cash market ETFs would exceed the amount of money that entered the GBTC fund, the largest Bitcoin fund in existence, in the last bull cycle. This detail underlines the magnitude of the potential impact that these ETFs can have on the cryptocurrency market.
Historically, during previous bull markets, Bitcoin’s market capitalization has expanded at a rate 3 to 5 times faster than its realized capitalization. This underlines how each new dollar invested in the Bitcoin market can have a significantly larger impact on its overall value.
Speculation surrounding the approval of Bitcoin ETFs became evident when a false report caused a sudden spike in the price of Bitcoin to $30,000. This episode has led some to speculate that the bullish momentum could sustain as the market awaits actual regulatory approval.
In a sign of growth and optimism in the market, the GBTC price discount has reached its lowest level in almost two years. This reflects greater optimism in the cryptocurrency market and the expectation that Bitcoin ETFs could mark a before and after in institutional investment in the crypto ecosystem.
Since the cryptocurrency market surpassed the trillion-dollar mark in January 2021, it has continued its expansion. Currently, the total market capitalization stands at around $1.1 trillion, with Bitcoin accounting for more than 50% of that value according to data from CoinMarketCap.