Galaxy Digital’s Bullish View

Galaxy Digital, a prominent cryptocurrency firm, is eyeing the potential approval of a spot Bitcoin (BTC) ETF as a pivotal catalyst for the growth and widespread adoption of this leading digital asset. In an analysis dated October 24, Galaxy’s research associate, Charles Yu, offered insights into the implications of a spot BTC ETF in the United States and its relevance in light of evolving market dynamics.

The Projections: A 74% Surge in Bitcoin’s First Year Post-ETF Approval

Galaxy Digital projects an impressive 74% surge in Bitcoin’s value within the first year following the approval of a BTC ETF. This surge could propel the price of the asset to a substantial $59,000, signifying a notable 6.1% increase in the initial month. These projections might not be far from reality, given the historical trends of Bitcoin’s price surges in anticipation of an ETF approval.

The Anticipation’s Impact on Bitcoin’s Price

The build-up to an ETF approval has consistently influenced Bitcoin’s price, with significant rallies observed during this period. Notable price surges were observed, surpassing $31,000 when BlackRock, Fidelity, Valkyrie, and other firms applied to the Securities and Exchange Commission (SEC) for ETF approval. The momentum is clearly visible as Bitcoin recently surged to over $35,000, marking a 16-month high, driven by the imminent SEC approval.

Wider Impacts on Adoption

The reports underscore the wide-reaching benefits of a spot BTC ETF approval, not only on the market but also for institutional investors, whom Galaxy Digital describes as the most readily accessible and direct market for the ETF. The United States boasts a vast wealth management industry, with assets totaling $48 trillion across banks, registered investment advisors, and brokers. An ETF approval is poised to simplify the process of channeling institutional funds into the cryptocurrency market.

Galaxy predicts that the Registered Investment Advisor (RIA) channel will experience a 50% growth in the first year and an impressive 100% growth in the following three years. Banks and brokers, on the other hand, are expected to grow by 25% in the initial year and a significant 75% over the subsequent three years. This collective growth is anticipated to expand the United States’ market size for a BTC ETF, reaching $14 trillion in the first year and surging to $39 trillion within three years.

Additionally, should international clients, other investment products, and retail services embrace the concept, investments are expected to extend beyond these estimated figures.

Facilitating Adoption and Regulation

A Bitcoin spot ETF will serve as a gateway, enhancing accessibility for both institutional and retail investors across various wealth segments. This transition extends the involvement in the cryptocurrency market beyond wealth managers, making it accessible to RIAs, brokerages, and other fiduciaries.

Moreover, the entry of major players from traditional finance into the spot ETF arena brings an infusion of credibility, driving the need for comprehensive regulation within the market. The cryptocurrency market has encountered regulatory hurdles in the United States, with the fall of the Terra ecosystem and the notorious FTX implosion serving as prominent examples. The arrival of a spot ETF could usher in a new era of effective regulation and oversight in the cryptocurrency landscape.