Galaxy Digital predicts a massive capital influx into Bitcoin with the potential approval of a U.S. spot ETF.
Dive into the myriad advantages of a spot ETF over existing investment options, why such a financial product could be a major turning point for the crypto industry, and what it means for different types of investors.
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Could a Spot ETF Drive a Trillion-Yen Capital Inflow into Bitcoin?
Galaxy Digital, a cryptocurrency investment firm, predicted in a blog post published on October 24, 2023, that the initiation of a Bitcoin spot ETF in the United States could potentially lead to a capital influx of tens of billions of dollars.
Expectations are high in the crypto industry for the approval of a spot ETF in the United States.
Galaxy Digital claims, "The approval of a physical Bitcoin ETF in the U.S. will be one of the most impactful factors for the adoption of Bitcoin and cryptocurrencies."
Advantages of a Bitcoin Spot ETF
Galaxy Digital points out that "existing Bitcoin investment options have significant drawbacks for investors."
According to them, a spot ETF is ideal for investors who want to profit from Bitcoin's price movements without owning or managing the cryptocurrency themselves. They list various benefits, such as:
- Lower fees due to increased competition
- High liquidity due to listing on major exchanges
- Superior price tracking compared to futures and other financial products
- Investable from various platforms
- Meeting strict compliance requirements set by regulatory authorities
- A possible reduction in Bitcoin volatility
Why a Bitcoin ETF Matters
Reasons cited for the potentially significant impact of a Bitcoin ETF on the cryptocurrency market include "increased accessibility for the wealthy" and "expanded acceptance through official endorsements by regulatory authorities and credible businesses."
Galaxy Digital also notes that "the range of Bitcoin investment funds available now is limited."
They add, "An ETF is a more directly regulated product that can increase access to a wider range of investors, including affluent individuals."
Furthermore, they state, "62% of assets in the U.S. are held by individuals aged 59 and above, yet only 8% of those over 50 invest in cryptocurrencies.
This number is dramatically low compared to the 25% of those aged 18-49." If trusted and familiar brands offer Bitcoin ETFs, they could attract untapped older and wealthier demographics.
Impact of Capital Inflow Due to Spot ETFs
Galaxy Digital says, "If a Bitcoin spot ETF is approved, it's likely to become the most directly accessible market from the U.S. wealth management industry."
As of October 2023, assets managed in the industry are as follows:
- Broker-dealers: $27 trillion
- Banks: $11 trillion
- Investment advisors: $9 trillion
- Total: $47.3 trillion
Regarding the anticipated capital inflow upon the launch of a U.S. Bitcoin spot ETF, they project $14.4 billion in the first year, $26.5 billion in the second year, and $38.6 billion in the third year.
They also touch upon the potential impact on Bitcoin's price, stating, "In the first month following the launch of the ETF, Bitcoin could rise by 6.2% and potentially see a 74.1% increase over the course of a year."
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Grayscale Wins Lawsuit Over Bitcoin ETF Conversion: US Appeals Court Orders Reevaluation by SEC
Discover how Grayscale clinched a victory in a lawsuit concerning the conversion of its GBTC investment trust to a Bitcoin spot ETF. The U.S. Court of Appeals has ordered the SEC to conduct a reevaluation, setting the stage for potential industry-wide changes.
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