Charles Yuhe, a research associate at capital market firm Galaxy Digital, predicted that a U.S. Securities and Exchange Commission’s (SEC) approval of spot Bitcoin exchange-traded fund (ETF) could push the token’s price by 75 percent within a year.
This potential development might also draw in more than $14 billion in investments. Should this materialize, Bitcoin’s price could return to its previous peak in late 2021, reaching nearly $70,000.
This week has witnessed a remarkable surge in Bitcoin and cryptocurrency values, driven by an unexpected announcement from a major Wall Street firm. Bitcoin’s price point recently exceeded $35,000 per unit, marking its highest valuation in more than a year.
This surge is primarily attributed to the growing excitement surrounding BlackRock’s application for a spot crypto ETF and news about Berkshire Hathaway founder Warren Buffett reaping substantial profits from Bitcoin investments.
Yuhe said the approval of spot crypto ETF would increase accessibility to the nascent market via the U.S. wealth management industry, affecting the broader market. He pointed out that, by October 2023, the combined assets managed by broker-dealers, banks, and RIAs amounted to $48.3 trillion.
“Anticipation that ETFs will be approved soon is rising, and our analysis suggests these products could see significant inflows, primarily driven by the wealth management channels that cannot currently access safe and efficient bitcoin exposure at scale,” Yuhe said in a note.
Besides ETF inflows, Galaxy Digital has named other factors that may push Bitcoin into new highs, such as the halving of Bitcoin in April next year. Taking place every four years, Bitcoin halving is an event when the reward for the token’s mining is reduced by half. This mechanism helps maintain the circulating Bitcoin, making the digital asset inflation-proof.
According to Galaxy Digital, the possibility that the Federal Reserve is nearing the end of its monetary tightening cycle can also turn the Bitcoin market bullish.
Competition in spot Bitcoin ETF space
Samer Hasn, a market analyst at online brokerage XS.com, pointed out that the appearance of BlackRock’s listing in the DTCC doesn’t confirm the actual launch of the fund or guarantee it will happen. However, it could be seen as a step in BlackRock’s preparations for an imminent ETF launch.
Additionally, other companies, such as Grayscale Investments, have sought approval to introduce comparable Bitcoin ETFs. While the SEC initially denied Grayscale’s ETF, a three-judge panel in the D.C. Court of Appeals reversed this decision in August. They found that the SEC didn’t provide a sufficient explanation for rejecting Grayscale’s application.
This development contributed to the rise in cryptocurrencies over the summer. However, it’s important to note that the SEC has not officially granted approval for the fund, and investors may be acting hastily or getting ahead of themselves.
“I think that these rapid rises in bitcoin are somewhat exaggerated,” said Hasn. “Regulatory and legislative concerns are still clouding this market, and I don’t see opportunities soon to dispel these concerns as the legal battles continue.”
Fear is another reason why the value of Bitcoin might be going up. Analysts say many people consider Bitcoin a reliable asset to keep during uncertain times. They call it “digital gold” because it’s a way to invest that’s different from regular stocks and bonds.
Meanwhile, a former managing director at BlackRock recently foresaw that it’s just a matter of a few months until the SEC grants approval for a long-anticipated Bitcoin spot ETF, granting the green light to funds managing a substantial $17.7 trillion in assets.