Bitcoin (BTC) is trading at $34,795 as of Oct. 25, 2023, up more than 25% in a week. This means that most Bitcoin holders are in profit, as data from IntoTheBlock shows. However, the price of BTC could soar even higher if a spot Bitcoin ETF is approved by the U.S. regulators, according to a new report by Galaxy Digital.
Galaxy Digital is a crypto fund that offers various products and services related to digital assets. In its report, Galaxy Digital argues that a spot Bitcoin ETF would have several advantages over the current investment options, such as lower fees, higher liquidity, better price tracking, more convenience, and stronger regulatory compliance.
A spot Bitcoin ETF would also increase the accessibility and adoption of Bitcoin among different wealth segments, especially the U.S. wealth management industry, which oversees $48.3 trillion in assets. Galaxy Digital estimates that the addressable market size of a U.S. Bitcoin ETF could be as high as $14 trillion in the first year and $39 trillion in the third year.
Based on these assumptions, Galaxy Digital projects that a Bitcoin ETF could attract inflows of $14 billion in the first year and $39 billion in the third year. By comparing the historical relationship between gold ETF inflows and gold price changes, Galaxy Digital predicts that a Bitcoin ETF could cause a 6.2% increase in BTC price in the first month and a 74% increase in the first year.
Galaxy Digital also notes that the impact of a Bitcoin ETF on BTC price would be 8.8 times greater than that of a gold ETF on gold price, due to the smaller market size and higher volatility of Bitcoin. Moreover, Galaxy Digital expects that the market narratives around the next Bitcoin halving in April 2024 would further boost the demand and price of BTC.