Sanford C. Bernstein, a respected research firm, has released a revealing report on the potential influence of Exchange Traded Funds (ETFs) on the dynamics of the Bitcoin market. The research suggests that if the US regulatory authorities approve a fund directly investing in spot Bitcoin, ETFs could represent around 10% of Bitcoin’s total market value within the next three years.
Such a development would significantly bolster Bitcoin’s presence in traditional financial portfolios and potentially accelerate institutional adoption. Gautam Chhugani, an analyst at Bernstein, highlighted the growing likelihood of a spot Bitcoin ETF in the research report.
Notably, Chhugani had previously disclosed in another report that the US Securities and Exchange Commission (SEC) perceives a Bitcoin Spot ETF as “unreliable” due to the lack of oversight on crypto exchanges like Coinbase. Concerns revolve around potential price manipulation and unreliability.
Despite the ongoing speculation regarding the SEC’s decision on a Spot Bitcoin ETF, the Grayscale Bitcoin Trust currently holds approximately 4% of the total Bitcoin supply. However, according to Bloomberg, the introduction of a direct investment ETF could more than double this figure, potentially catalyzing substantial growth in the cryptocurrency investment landscape.
Upon receiving regulatory approval, Bernstein envisions a “growth flywheel” phenomenon, fueled by inflows from both retail and other institutional sources. This anticipated cascade of investments and liquidity echoes the pattern seen in various financial markets when novel financial products are introduced.
The growth trajectory of the broader ETF market is a telling example of the potential impact. ETFs have experienced explosive growth since their inception, managing substantial assets across diverse sectors and asset classes.
A Spot Bitcoin ETF would integrate a highly liquid, decentralized, and increasingly accepted asset into this expanding landscape, further affirming Bitcoin’s legitimacy within the financial ecosystem.
Meanwhile, Bitcoin’s price has faced challenges in surpassing the $30,000 threshold after dipping below it last week. As of the present moment, Bitcoin is trading at $29,623, exhibiting a slight 0.5% increase over the past 24 hours.
Despite its price struggles, Bitcoin’s market capitalization has surged by over $10 billion within the last week. Its market cap escalated from approximately $560 billion earlier last week to the current $573 billion.
Accompanying the surge in market capitalization, Bitcoin’s trading volume has witnessed a substantial spike. The cryptocurrency’s 24-hour trading volume stands at $11.3 billion, a notable increase from $8.7 billion observed the previous Monday.