Crypto News

Bitcoin on the Brink of $42K: Matrixport’s Insight on BlackRock’s ETF Application

Bitcoin’s Potential Surge to $42K

Crypto financial services platform Matrixport has painted a bullish picture for Bitcoin’s (BTC) future, anticipating a significant rally fueled by favorable macroeconomic conditions and reduced US inflation. In their recent report titled “Matrix onTarget,” the company highlighted various key factors.

Grayscale’s Impressive Performance

Matrixport first noted the impressive performance of Grayscale Investments’ Bitcoin Trust (GBTC) shares. These shares have experienced an astounding 167% growth year-to-date, outpacing Bitcoin’s 71% increase. At the start of the year, GBTC’s net-asset-value (NAV) discount was at -45%, which has since slightly narrowed to -43%.

BlackRock’s Game-Changing Move

The real turning point emerged with BlackRock’s announcement of its Bitcoin ETF application on June 15, 2023. This development has significant implications for the cryptocurrency landscape.

RIAs’ Enormous Potential and Bitcoin Inflows

Matrixport’s earlier report highlighted the vast potential within the US registered investor advisor (RIA) community, comprising around 15,000 advisors overseeing approximately $5 trillion. Even a conservative 1% allocation recommendation for Bitcoin from this group could potentially bring in around $50 billion in inflows.

Comparison to Precious Metals ETFs

Matrixport compared this influx of funds to the precious metals ETFs, which currently boast a market cap of around $120 billion. If a portion of precious metal ETF investors, say 10-20%, consider diversifying into a Bitcoin ETF as a hedge against monetary debasement and inflation, it could result in an influx of $12 to $24 billion into the Bitcoin ETF.

The Potential for a $56,000 Bitcoin

Moreover, with the possibility of a more substantial $50 billion inflow stemming from a 1% allocation recommendation by RIAs, Bitcoin’s potential to rally up to $56,000 becomes evident, as highlighted by the firm.

Eagerly Anticipating a Spot Bitcoin ETF

Matrixport’s optimistic projections align with the growing anticipation surrounding the launch of a spot Bitcoin ETF. The recent US court ruling in favor of Ripple, contesting the SEC’s allegations related to XRP, plays a role in this outlook.

The SEC’s Likely Shift in Stance

The District Court for the Southern District of New York issued a ruling stating that the “offer and sale of XRP on digital asset exchanges did not amount to offers and sales of investment contracts.” Matrixport referred to JPMorgan analysts, who indicated that the SEC might be compelled to approve multiple spot BTC ETF applications following Grayscale’s legal victory.

This shift suggests the SEC could need to retroactively withdraw its previous approval of futures-based Bitcoin ETFs to defend its denial of Grayscale’s proposal to convert its Bitcoin trust into an ETF.

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