CryptoQuant has revealed in its latest report that bitcoin‘s market capitalization could rise up to $1 trillion after the launch of spot ETFs.
bitcoin Could See 165% Rise When Spot ETFs Launch
Yesterday, fake news about the approved iShares bitcoin Spot ETF took the sector by surprise as all cryptocurrencies saw strong rallies. At the peak of this rise, btc had approached the $30,000 level.
However, when the market realized the truth about the announcement, the asset quickly returned to the levels it was at before the rally. While the gains were only brief, the rally provided a glimpse of the strong reaction the market could see to the launch of an actual ETF.
This was just a spot ETF; however, several others are waiting in line to be approved. What would the market be like when all these ETFs have been launched? in his new reporton-chain analysis firm CryptoQuant has discussed just that.
<img decoding="async" class="alignnone wp-image-555764 size-full aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png" alt="bitcoin Spot ETF” width=”1158″ height=”484″ srcset=”https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=1158 1158w, https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=460 460w, https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=768 768w, https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=860 860w, https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=750 750w, https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=1140 1140w” sizes=”(max-width: 1000px) 100vw, 1000px” loading=”lazy” data-recalc-dims=”1″/>
The assets under management of the various companies waiting for ETF approval | Source: CryptoQuant
The table above shows information about the various companies waiting to be approved for the bitcoin Spot ETF, including the total size of their assets under management (AUM).
“Although these ETFs are not expected to be approved this year, the likelihood that they will be approved before the final deadline (March 2024) has been growing as a result of favorable court rulings for Grayscale (GBTC Fund) and XRP in their respective legal matters. fight the SEC,” says the firm.
In total, the managed assets of these companies are around $15.6 trillion. If they allocated just 1% of this amount to btc, it would mean inflows of a whopping $155 billion into the asset. “To put it in context, these amounts represent almost a third of bitcoin‘s current market capitalization,” notes CryptoQuant.
Now, it’s not exactly easy to say how this influx of capital could affect btc‘s market capitalization. Generally, the market capitalization increases by slightly more than the gross capital flowing into the cryptocurrency.
The firm has used the “realized limit” metric to evaluate this relationship. Realized limit is a capitalization method for btc that calculates its total value assuming that the value of each coin is the same as the price at which the last transaction was made on the blockchain.
The realized limit can be imagined as the total investment made by investors, taking into account the prices at which each bought their coins. The chart below shows how this realized limit has compared to the market over the years.
<img decoding="async" class="alignnone wp-image-555767 size-full aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/1697573957_827_Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png" alt="bitcoin Realized Limit” width=”1041″ height=”621″ srcset=”https://technicalterrence.com/wp-content/uploads/2023/10/1697573957_827_Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=1041 1041w, https://technicalterrence.com/wp-content/uploads/2023/10/1697573957_827_Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=460 460w, https://technicalterrence.com/wp-content/uploads/2023/10/1697573957_827_Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=768 768w, https://technicalterrence.com/wp-content/uploads/2023/10/1697573957_827_Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=860 860w, https://technicalterrence.com/wp-content/uploads/2023/10/1697573957_827_Bitcoin-Market-Cap-Could-Increase-by-1-Trillion-After-Spot.png?w=750 750w” sizes=”(max-width: 1000px) 100vw, 1000px” loading=”lazy” data-recalc-dims=”1″/>
The comparison between the trends of the realized cap and market cap | Source: CryptoQuant
The chart shows that market capitalization and realized capitalization often have noticeably different growth rates, as they have always followed quite different paths.
CryptoQuant calculated the relationship between the annual growths of the two capitalizations and found that for most of the asset’s history, the market capitalization has grown 3 to 6 times faster than the realized capitalization.
If the realized cap grows by $155 billion when spot ETFs are approved and asset managers allocate 1% of their AUM to bitcoin, the market cap could grow by between $450 and $900 billion.
The report notes that this figure implies that “market capitalization would increase between 82% and 165% from the current level and that the price of bitcoin could reach between $50,000 and $73,000 as a result of these fresh money inflows.”
btc Price
bitcoin has enjoyed some bullishness in recent days as the asset has now surpassed the $28,500 level.
<img decoding="async" loading="lazy" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/U9VQ74K0/" alt="bitcoin price chart” width=”1534″ height=”869″/>
btc has seen some growth recently | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Charts from TradingView.com, CryptoQuant.com
