In a recently published article bitcoin-etf-launch-price-impact-d94d4ad02d93″ target=”_blank” rel=”nofollow”>report Per CoinShares, analyst James Butterfill delves into the relationship between bitcoin exchange-traded fund (ETF) inflows and changes in bitcoin price.
The report addresses the critical question of how many inflows into ETFs could be anticipated by launching a bitcoin Spot ETF in the US and the potential impact of these flows on the price of bitcoin.
bitcoin ETFs Could Attract $14.4 Billion Inflows
Butterfill highlights Galaxy’s analysis, which estimates that the United States has approximately $14.4 trillion in addressable assets. Assuming a conservative scenario where 10% of these assets are invested in a spot bitcoin ETF with an average allocation of 1%, it could generate approximately $14.4 billion in inflows over the first year.
According to the report, this would mark the largest record entriessurpassing 2021 inflows of $7.24 billion, which represented 11.5% of assets under management (AuM).
However, it is worth noting that in 2020, inflows reached $5.5 billion, representing 21.6% more assets under management, while the price of bitcoin increased by 303% compared to 60%. in 2021.
The report suggests a correlation between inflows as a percentage of assets under management and price changes. Entries match rising prices, indicating that many ETF investors engage in momentum trading. On the contrary, during periods of price stagnation, capital inflows have tended to moderate.
However, it is important to note that investors in exchange-traded products (ETPs) are not necessarily leading the price action, as evidenced by volume data indicating that ETP volumes represent an average of 3.5% of trading volume. Daily bitcoin trading on trusted exchanges since 2018.
bitcoin Price Rising Predicted
By analyzing weekly ETP flows and their percentage of assets under management, the report identifies a trend with a coefficient of determination (R2) value of 0.31, suggesting a discernible relationship between flows and price changes.
Using this trend line, the report estimates that the $14.4 billion in inflows mentioned above could push the price of bitcoin up to $141,000 per coin.
However, accurately predicting the precise level of inputs following the launch of spot ETFs remains a challenge. The report acknowledges the difficulty of determining the exact magnitude of the inflows.
It emphasizes that regulatory approval and corporate acceptance are gradual processes due to the perceived complexity of bitcoin, which may require corporations and funds to build knowledge and trust before committing to investment.
The potential wall of demand that could materialize following the introduction of a spot ETF is uncertain. While these ETFs offer portfolio diversification and improved Sharpe ratios, regulatory approval and corporate adoption may take time due to the perceived complexities associated with bitcoin.
Ultimately, CoinShares believes that corporations and funds may need an extended period to familiarize themselves with the asset class and gain confidence before entering the market.
Ultimately, the CoinShares report sheds light on the potential impact of bitcoin ETFs on the price of btc. While it is difficult to precisely determine the level of inflows and their subsequent effect on the market, the report suggests that the launch of a bitcoin spot ETF in the US could lift the price of bitcoin to $141,000 per coin.
Currently, bitcoin (btc) is consolidating above the important psychological level of $36,000. In the last 24 hours, it has seen a minimum decrease of 0.2%, while it shows an increase of 1.3% within 1 hour.
Featured image from Shutterstock, chart from TradingView.com
