The US Securities and Exchange Commission (SEC) has been dragging its feet on approving a spot Bitcoin exchange-traded fund (ETF) for months. In September, Wall Street’s top cop said it is still “reviewing” a flurry of spot Bitcoin ETF applications, including one from Grayscale Investments.
Spot Bitcoin ETFs could bring back the glory days for crypto, says CryptoQuant
However, the launch of Ether futures ETFs, and favorable court rulings for Grayscale and Ripple, have raised the odds of spot Bitcoin products getting approved sooner rather than later. Speculation has been rife among the crypto community that such an approval could trigger a stunning rally in Bitcoin prices, pushing the crypto market even higher.
If the SEC were to give its blessing to spot Bitcoin products, the overall crypto market would expand by $1 trillion, with the market capitalization of Bitcoin alone hitting $900 billion, on-chain analytics firm CryptoQuant has said in its recent report.
Next wave of institutional Bitcoin adoption on the horizon
The cryptocurrency market experienced the first phase of institutional Bitcoin adoption during 2020-21, with institutions adding Bitcoin to their balance sheets. CryptoQuant is hopeful that the next wave of institutional adoption could follow, should financial institutions provide Bitcoin access to their clients through spot ETFs.
The potential inflow from spot ETFs will overshadow the capital influx seen by the Grayscale Bitcoin Trust (GBTC) in the last bull market cycle, according to CryptoQuant’s report. It’s worth mentioning that GBTC is the world’s largest crypto fund, managing assets worth more than $16 billion.
Top financial institutions are making a beeline to launch spot Bitcoin products. The list includes names like BlackRock, Invesco, VanEck, Wisdomtree, Fidelity, and ARK Invest, among others.
CryptoQuant figures if applicants direct just 1% of their Assets Under Management (AUM) towards their ETFs, it would result in inflows of nearly $155 billion into the Bitcoin market. That’s close to a third of Bitcoin’s current market capitalization of nearly $553 billion. If CryptoQuant’s predictions hold true, Bitcoin prices could soar to $50,000-70,000 levels and its market cap will grow by $450-900 billion.
While Bitcoin has shown signs of recovery, hovering around the $28,000 mark for weeks, the world’s largest cryptocurrency is still trading well below its peak levels. However, CryptoQuant points out that Bitcoin has seen its market capitalization increase three to five-fold above its realized capitalization in previous bull market cycles.
Bitcoin rallies on false BlackRock spot ETF news
It’s worth noting that Bitcoin prices briefly touched $30,000 levels earlier this week after Cointelegraph published a report—falsely claiming that the SEC had greenlit BlackRock’s spot Bitcoin ETF. BlackRock has since come forward to refute claims of its spot Bitcoin ETF being approved.