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BlackRock ETF Approval Could Propel Bitcoin to $42K-$56K, Says Matrixport

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Oct 24, 2023 at 08:50 am

Matrixport, a leading player in the cryptocurrency services sector, has unveiled an optimistic outlook for Bitcoin (BTC), suggesting the potential for a substantial surge, with the digital currency soaring to a possible peak of $56,000. This bullish forecast hinges on the condition that regulatory approval is granted for the BlackRock spot Bitcoin exchange-traded fund (ETF). The core premise of this outlook centers on the likelihood of a significant influx of capital, potentially reaching an impressive $24 billion.

Matrixport's report underscores the viability of a more conservative estimate, with Bitcoin potentially reaching $42,000. This projection is grounded in the assumption that a portion of investors currently engaged with gold exchange-traded funds (ETFs), ranging from 10% to 20%, would choose to diversify their investment portfolios by allocating funds to a spot Bitcoin ETF. The report explicates, "Assuming that 10-20% of those investors in precious metals ETFs opt to diversify their portfolios into BTC, we can estimate potential capital inflows ranging from $12 billion to $24 billion into the Bitcoin ETF. While the current market capitalization of GBTC stands at $17-18 billion, it has reached a zenith of $44 billion. Consequently, our estimate of $12-24 billion is relatively conservative."

The significant catalyst for this optimistic projection is BlackRock, a prominent global investment management behemoth. BlackRock initiated the application process for a spot Bitcoin ETF on June 15. Subsequently, the Bitcoin market experienced an upswing, with prices surging from $24,800 to surpass the $30,000 mark in the span of just seven days. At present, Bitcoin is trading at approximately $28,500.

Matrixport underscores the influential role played by the extensive community of U.S. registered investor advisors (RIAs), comprising 15,000 professionals overseeing assets totaling around $5 trillion. The report posits that even a modest recommendation for a 1% allocation to Bitcoin by this group could lead to a substantial capital inflow, potentially amounting to $50 billion within the cryptocurrency market.

Additionally, Matrixport draws attention to the market capitalization of Tether (USDT) as a potential indicator for ETF-related inflows. It suggests that a $24 billion increase in Tether's market capitalization could be indicative of the initiation of investments in ETFs, thereby propelling Bitcoin's price to the $42,000 mark—an estimate regarded as relatively conservative. However, should a more substantial influx materialize, amounting to $50 billion (reflecting a 1% allocation recommendation from RIAs), Bitcoin could potentially witness a remarkable rally, with its price ascending to $56,000.

It is essential to bear in mind that while these projections are indeed promising, the U.S. Securities and Exchange Commission (SEC) has recently opted to delay the consideration of several ETF applications. This deliberate delay is ostensibly aimed at affording the regulator sufficient time to thoroughly evaluate and deliberate on the burgeoning ETF space.

Read more: Genesis Given 5-Day Deadline to Respond to Terra Subpoena

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