Bitcoin Price: How Far Will It Go After the Spot Bitcoin ETF Approval?
BTC price projection post-Bitcoin ETF approval: Backed by the proven impact on Gold price following the Gold ETF’s approval
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Important clues on how far the Bitcoin price can go after an ETF approval can be inferred by examining what happened to the gold price when the spot gold ETF was approved.
In this article, we will give you a post-ETF Bitcoin price projection based on solid fundamentals.
🧈 Similarities between Bitcoin and Gold
Bitcoin is often compared to gold as a store of value and inflation hedge. Both have limited supply, independence from traditional finance, and global acceptance.
Saying this, Bitcoin spot ETF’s impact on price might mirror gold ETF’s impact on gold’s price.
Influential figures and institutions like BlackRock’s Larry Fink, ARK’s Cathie Wood, and major banks have also noted the similarities between Bitcoin and Gold:
- Scarcity: Bitcoin, like gold, has a finite supply, with a fixed cap of 21 million coins (in fact, Bitcoin is more scarce than gold!).
- Value Storage: Both are seen as inflation-resistant and can preserve value over time.
- Market Sentiment: Investors may turn to gold or Bitcoin during economic instability or market volatility.
- Market Behavior: Prices for both are driven by demand and investor sentiment, making them speculative investments.
These similarities suggest Bitcoin’s price could follow trends similar to gold’s.
✨ The ETF impact
What we saw before was that the gold ETFs positively impacted the price of gold. We will likely see a similar effect on Bitcoin:
- Boosting Liquidity: Gold ETFs make investing in gold easier, increasing market participation and potentially impacting prices.
- Raising Demand: They lower barriers to gold investment, attracting more investors.
- Shaping Sentiment: Positive market outlooks can drive up demand for gold ETFs.
At the time of writing this article, there are approximately $100 billion worth of spot gold ETFs.
💡 What we want to define in this article is:
What happens to the Bitcoin price if a similar influx of money comes to the Bitcoin ETF?
We have observed a 90% correlation between the gold ETF AUM — Assets Under Management — and the gold price. This is important to understand where the Bitcoin price can go after the spot ETF is approved.
🤔 Why do we need a spot Bitcoin ETF in the United States?
Bitcoin ETFs offer several advantages:
- Diversification: Investing in a BTC ETF allows for exposure to the crypto world, diversifying one’s portfolio and reducing risk, while also providing institutional investors with an accessible route to Bitcoin investment.
- Ease of Use: ETFs simplify trading compared to handling Bitcoin directly.
- Liquidity: They’re traded on exchanges, making buying and selling easier.
- Regulation: ETFs provide a regulated investment option for crypto exposure. This is good for institutions and individuals with high net worth.
The potential approval of Bitcoin spot ETFs in the US is significant due to the size and liquidity of the US stock market, which makes up nearly 50% of the global equities market value.
Blackrock, 21Shares & ARK Invest, Bitwise, VanEck, Wisdomtree, Valkyrie, Fidelity, Invesco & Galaxy: the biggest asset managers in the world are all chasing the spot Bitcoin ETF.
The anticipation for the approval of the first U.S. Bitcoin spot ETF, with applications from all these major firms, is high, with expectations pointing to early 2024 for potential SEC approval.
📈 Bitcoin price prediction with the spot Bitcoin ETF approval
The potential impact of Bitcoin spot ETFs on Bitcoin’s price can be compared to that of gold ETFs on gold prices. Using NYDIG’s method with a money multiplier of 10, each dollar invested in a Bitcoin ETF could have a tenfold effect on Bitcoin’s price.
If we assume the Bitcoin spot ETFs could have assets under management (AUM) ranging from $10 billion to over $100 billion, we can predict a significant influence on Bitcoin’s price, depending on the actual ETF inflows and the current amount of Bitcoin in circulation.
We use the following formula for the Bitcoin price projection:
BTC price = ((1/FED reserve requirement ratio) * (ETF Inflow)) + base price
For reference, consider that the Grayscale Bitcoin Trust (GBTC) has a $30 billion market capitalization despite the fact that GBTC is a very limited product.
If GBTC has a $30 billion market cap, and gold ETFs have approximately $100 billion market cap, it’s pretty easy to see the Bitcoin ETFs getting a $100 billion inflow, placing the Bitcoin price at around $95,000.
In the very long term (10 years), the Bitcoin price might go to $1,000,000; I have covered this price projection in this article.
🗝️ Key takeaways
The influence of gold ETFs on gold prices can be used to understand how Bitcoin ETFs might affect Bitcoin prices.
If the spot Bitcoin ETF has a similar impact on Bitcoin as the gold ETF had on gold, it can trigger a price surge that will take Bitcoin to a price range between $90,000 and $100,000.
What are your thoughts?
Can the Bitcoin ETF have an even higher impact on BTC price?
What’s your price prediction?
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