The prospect of SEC-approved bitcoin exchange-traded funds (ETFs) has the crypto community abuzz. Major financial institutions like Standard Chartered Bank are predicting enormous inflows into bitcoin if these ETFs get the green light.
Standard Chartered forecasts between $50-100 billion flowing into bitcoin ETFs this year if the SEC approves any of the numerous spot bitcoin ETF applications currently under review. This influx could boost bitcoin’s price as high as $200,000 by end-2025, they predict.
Other analysts share Standard Chartered’s optimism. Will McDonough, Chairman of Corestone Capital, expects $1 billion worth of inflows within the first quarter after approval. Galaxy Digital previously forecasted over $14 billion entering bitcoin ETFs in the first year post-approval.
| Firm | Estimate | Timeframe | Assumptions |
|---|---|---|---|
| Standard Chartered | $50-$100 billion | 2023 | If SEC approves spot BTC ETFs |
| Corestone Capital | $1 billion | End of Q1 2023 | If SEC approves spot BTC ETFs |
| Galaxy Digital | $14.4 billion | First year after approval | In first year after SEC approves spot BTC ETF |
| Galaxy Digital | $27 billion | Second year after approval | In second year if spot BTC ETF approved |
| Galaxy Digital | $39 billion | Third year after approval | In third year if spot BTC ETF approved |
Driving this predicted demand is bitcoin’s fixed supply, the demographic appeal of SEC-approved ETFs, and the prospect of easily accessing crypto without direct custody concerns. Mainstream investors have long clamored for the familiar ETF wrapper to gain bitcoin exposure in their brokerage accounts.
Why the Push for Bitcoin ETFs?
Exchange-traded funds track an underlying basket of assets, providing efficient exposure and intraday liquidity from the comfort of traditional brokerages. ETFs trade on stock exchanges just like regular stocks.
In the past, investors could only access bitcoin through crypto-native venues like Coinbase. But barriers like complex custody solutions and Know Your Customer (KYC) protocols have hampered mainstream adoption.
A SEC-approved bitcoin ETF solves these problems. Investors can buy and sell just like any other ETF without worrying about wallets or private keys.
This convenience significantly expands bitcoin’s addressable market. Suddenly, everyday investors and financial advisors can allocate 1-5% of multi-asset portfolios to bitcoin. Passive investing strategies also become possible through index tracking ETFs.
Moreover, an ETF likely boosts bitcoin’s legitimacy in the eyes of cautious institutional players. Regulatory approval signals official acceptance of bitcoin’s staying power and viability.
All this pent-up demand would get unleashed into ETFs on Day 1.
Inflows Estimates: $50B to $100B
Standard Chartered bases their eyebrow-raising estimates on historic precedent. When the first gold ETF launched in 2004, it ignited a 7-year gold bull run and a 4x price increase. Gold ETP holdings multiplied as investors chased gains.
They expect a similar, albeit more rapid, trajectory for bitcoin ETFs. “Our view is the BTC ETF market will develop more quickly,” they wrote.
If inflows reach $100 billion, over 1.3 million BTC would enter ETFs according to their calculations. This represents an incredible 10% of bitcoin’s total supply. With new supply issuance halving every 4 years, even a fraction of that inflow could catapult prices higher.
Standard Chartered believes the resulting supply shock could propel bitcoin to $200,000 by end-2025.
Will McDonough also bases his estimates on pent-up ETF demand. He highlights that many investors sat out the crypto run waiting for the familiar ETF wrapper. By resolving barriers to entry, long-awaited capital would come flooding in.
Opportunity Beyond Bitcoin
The ETF excitement extends beyond just bitcoin. Analysts eagerly await an ether ETF after several asset managers filed applications last year. The SEC must approve or reject these filings by May.
Standard Chartered expects SEC consent for ether ETFs as well. They wrote, “We would not be surprised if the SEC also allows ETH ETFs.”
After years of futility, bitcoin ETF approval would profoundly reshape the crypto landscape. The SEC continues evaluating several spot bitcoin ETF applications under new leadership. If they give just one the green light, crypto adoption may accelerate exponentially on a tidal wave of new money.
Credit: by Google News