Potential Trillion-Dollar Boost: CryptoQuant Forecasts Market Surge with Spot Bitcoin ETF Approvals

CryptoQuant, a leading firm in blockchain analytics, has forecasted that the potential approval of Bitcoin spot exchange-traded funds (ETFs) could introduce a substantial influx of $155 billion into the Bitcoin market capitalization.

In their most recent report, CryptoQuant delved into the intricate details of how the regulatory green light for Bitcoin spot ETFs could significantly raise Bitcoin's valuation to an impressive $900 billion. This development, they contended, could act as a catalyst for the broader cryptocurrency market, potentially propelling it to grow by an astounding $1 trillion.

CryptoQuant underlined that the initial surge of institutional interest observed between 2020 and 2021 predominantly revolved around institutions integrating Bitcoin into their balance sheets. They anticipate the next surge to revolve around financial institutions extending broader access to Bitcoin for their clientele through spot ETFs.

A plethora of distinguished financial institutions in the United States have submitted applications to introduce spot Bitcoin ETFs, with potential approvals expected to materialize by March 2024 at the latest.

The projected inflow of capital from spot ETFs could potentially surpass the capital influx observed in the Grayscale Bitcoin Trust (GBTC) during the last bullish market cycle. Presently, GBTC stands as the world's largest digital assets fund, overseeing assets valued at a staggering $16.7 billion.

According to CryptoQuant's estimations, if the entities seeking to list Bitcoin ETFs allocate 1% of their Assets Under Management (AUM) to these ETFs, it could trigger an infusion of approximately $155 billion into the Bitcoin market. This sum constitutes nearly a third of Bitcoin's current market capitalization. In the hypothetical scenario where this materializes, it could conceivably propel Bitcoin's price into a range spanning between $50,000 and $73,000.

Drawing on historical data, CryptoQuant pointed out that during previous bullish market phases, Bitcoin's market capitalization has grown at a rate three to five times higher than its realized capitalization. This indicates that for every $1 of fresh capital entering the Bitcoin market, the market capitalization could potentially surge by $3 to $5.

Recently, Bitcoin witnessed a momentary surge to $30,000 following the dissemination of a misleading report by Cointelegraph, erroneously claiming the approval of a spot Bitcoin ETF. Some analysts believe that this fervent bullish activity might deter bearish sentiment for an extended period.

Markus Thielen, the head of research and strategy at Matrixport, emphasized during a Telegram broadcast:

 "Nobody will dare to short BTC now for the foreseeable future. Even if this Cointelegraph news was false, BTC can still grind higher in anticipation of the approval."

The optimistic sentiment is further corroborated by the ongoing contraction of the GBTC discount, currently at its lowest point in nearly two years.

The cryptocurrency market's capitalization first surpassed the monumental $1 trillion milestone in January 2021. At present, the cumulative market capitalization stands at a remarkable $1.13 trillion, with Bitcoin commanding over 50% of this figure.

Read more: Matrixport Predicts Listed Bitcoin Miners as Top Contenders for 2024 Investment