A recent report from CryptoQuant, a data analytics agency, suggests that the approval of Bitcoin spot exchange-traded funds (ETFs) could trigger substantial growth in the cryptocurrency market. If authorized, the report predicts that Bitcoin’s market capitalization could reach $900 billion and the total crypto market capitalization could reach $1 trillion.
The first wave of institutional involvement in the crypto space was characterized by the addition of Bitcoin to institutional balance sheets. The second wave of adoption could be from financial institutions enabling customers to access Bitcoin through spot ETFs. Several key financial institutions in the United States have applied for regulatory approval to launch these ETFs. If approved, this could be a crucial milestone in the evolution of cryptocurrency investment vehicles.
According to the report, if ETF issuers allocate just 1% of their Assets Under Management (AUM) to these ETFs, it could lead to an inflow of approximately $155 billion into the Bitcoin market. This would be roughly one-third of Bitcoin’s current market capitalization and could potentially push Bitcoin’s price into a range of $50,000 to $73,000.
Historical data also reveals that in past bull markets, Bitcoin’s market capitalization typically expanded three to five times more than its realized capitalization. This means that for every $1 of new investment entering the Bitcoin market, the market’s capitalization could surge by $3 to $5.
The approval of spot Bitcoin ETFs could potentially attract significant institutional investment and help the cryptocurrency market reach the $1 trillion milestone. Despite its volatile nature, this development could become a catalyst for further institutional involvement.
