Galaxy Digital, a crypto investment company, has shared the results of its recent research. According to Galaxy Digital, if spot Bitcoin ETFs awaiting approval in the US are approved, they could attract at least $14.4 billion to the market in their first year of issuance. The company emphasizes that an ETF could be a better investment product compared to investment products such as trusts and futures contracts that are currently offered to investors and have a value of over $21 billion. According to the crypto investment firm, market entries could increase to $27 billion in the second year and $39 billion in the third year after the approval of spot ETFs.
In a published note for the research, it was stated that “the US asset management industry will have the most net new accessibility and will be the most addressable and direct market if a spot Bitcoin ETF is approved. As of October 2023, the total assets under the management of broker-dealers ($27 trillion), banks ($11 trillion), and RIAs ($9 trillion) amounted to $48.3 trillion.”
Spot Bitcoin ETFs have the potential to attract investments to Bitcoin through a highly regulated list of partners, including traditional funds and banks that offer strong protection and have a history of high investment offers. It is expected that there will be a demand for spot ETFs beyond expectations from investors. In fact, the price of Bitcoin increased by more than 10% within hours last week, indicating high expectations, following the claim that BlackRock’s ETF application was approved. Furthermore, the fact that BlackRock’s iShares Bitcoin Trust with the IBTC code was listed on the DTCC and the price of the largest cryptocurrency increased by over 12% on October 23 also confirms the high expectations.
Expectation of a 74% Surge in Bitcoin in the First Year
Moreover, Galaxy Digital added that considering the liquidity and price impact of billions of dollars of investment, market entries could help contribute to a 74% surge in the price of BTC in the first year. According to the crypto investment firm, current investment products have significant disadvantages for investors, such as high fees, low liquidity, and tracking errors, and all these investment products are inaccessible for a large investor base that holds a significant portion of global wealth. However, a spot Bitcoin ETF stands out as the most suitable investment vehicle for those who want to invest directly in BTC without having to own and manage BTC through self-custody.
In its research note, Galaxy Digital stated, “A spot Bitcoin ETF will provide greater efficiency through fees, liquidity, and price tracking. Although the fees have not yet been disclosed by the applicants for Bitcoin ETFs, ETFs generally offer lower fees compared to hedge funds or closed-end funds,” and added, “The presence of numerous ETF applicants will force fees to remain low for competition.”
Currently, there are 12 spot Bitcoin ETFs awaiting approval by the SEC. The companies that have applied to launch their own ETFs include Grayscale, 21Shares & Ark, BlackRock, Bitwise, VanEck, WisdomTree, Invesco, Galaxy, Fidelity, Valkyrie, Global X, Hashdex, and Franklin.
