According to Galaxy Digital, the launch of the bitcoin ETF is expected to result in a 74% increase in the price of bitcoin in the first year. Specifically, this forecast would take the value of bitcoin well above $59,000.
Furthermore, Galaxy Digital points out that this estimate does not take into account ‘second-order effects’. See below for full details.
Galaxy explains bullish forecast for bitcoin ETF
As expected, the price of Bitcoin is expected to rise 74.1% in the first year after the launch of bitcoin spot exchange-traded funds (ETFs) in the US, according to Galaxy Digital’s forecast.
Charles Yu, a research associate at Galaxy Digital, published a blog post on 24 October estimating that the total potential market size for bitcoin-based ETFs will reach $14.4 trillion in the first year after launch.
The 74% prediction was arrived at by assessing the expected price impact of investing in bitcoin ETFs using gold ETFs as a benchmark.
Yu’s estimates suggest that the price of bitcoin will increase by 6.2% in the first month after an ETF is launched, with a declining trend over the months until it reaches a monthly increase of 3.7% by the 12th month.
Furthermore, using bitcoin price data as of 30 September, a 74.1% increase would put the current price of bitcoin at $59,200.
Potential impact of bitcoin ETFs: 2024 could be a pivotal year for BTC
Markus Thielen, head of research at Matrixport, a financial services company for digital assets, made a similar prediction on 19 October, stating that the approval of BlackRock’s application for spot ETFs on bitcoin could boost the price of bitcoin from $42,000 to $56,000.
Yu also predicts that the potential market size for Bitcoin ETFs in the US will reach $26.5 trillion in the second year after launch and $39.6 trillion in the third year.
Charles Yu acknowledged that the delayed approval or rejection of spot ETFs on bitcoin would affect his price forecast.
However, he stressed that his estimates remain conservative and do not fully take into account the “second-order effects” resulting from the approval of bitcoin ETFs.
Yu expects that in the near future, other global and international markets will follow the US example and approve bitcoin ETFs, making them available to a wider range of investors.
Finally, he stressed that “2024 could be a pivotal year for Bitcoin”, mentioning the influx of money into ETFs, the expected halving of Bitcoin in April 2024, and the possibility of interest rates reaching or peaking in the short term.
Launch of iShares Bitcoin Trust (IBTC) marks decisive step towards bitcoin ETF
As we have previously reported, the anticipation of a bitcoin exchange traded fund (ETF) has created a positive wave in the cryptocurrency markets, with BlackRock, the world’s largest asset manager, leading the movement with the proposed iShares Bitcoin Trust.
IBTC, which is now listed on the Depository Trust and Clearing Corporation (DTCC) website under the ticker IBTC, represents a major step forward in the long-awaited approval of a bitcoin ETF in the US.
Eric Balchunas, senior analyst at Bloomberg Intelligence, noted that IBTC is the first spot bitcoin ETF to be listed on the DTCC.
DTCC, through its subsidiary National Securities Clearing Corporation (NSCC), has a clearing mechanism for ETFs that provides simplified verification of ETF portfolio components, a key requirement for automating the creation, redemption and settlement of ETF shares.
The path to a bitcoin ETF also involves key players such as Ark Invest and 21Shares, who have adapted their proposals in response to a constructive dialogue with the Securities and Exchange Commission (SEC), paving the way for a clearer regulatory framework.
Further progress was made when Grayscale filed to register its Bitcoin Trust (GBTC) under the Securities Act of 1933, with the aim of converting the trust into a spot ETF.
This move was reinforced by the DC Circuit Court of Appeals’ criticism of the SEC’s earlier rejection.
As these powerful financial institutions continue to overcome logistical challenges and meet regulatory requirements, we move closer to the mainstream adoption of bitcoin, with positive implications for its price and the future of the cryptocurrency market.
For now, however, the situation remains uncertain.