The approval of the BTC ETF could add $1 trillion to the crypto market

Compiled: Blockchain Knight

A recent study conducted by on-chain analytics firm CryptoQuant suggests that the introduction of BTC ETFs could significantly increase the market capitalization of the crypto industry, adding approximately $1 trillion**.

The company said that while the ETFs are not expected to be approved in the near future, recent court rulings in Grayscale's GBTC fund and XRP against the SEC raise the likelihood that ETFs will be approved before the March 2024 deadline.

CryptoQuant predicts that once these ETFs are finally approved, about $150 billion will flood into the BTC market, and the BTC market cap could increase by $450 billion to $900 billion. This growth is expected to occur as more institutional and retail investors embrace Crypto assets.

To support its argument, CryptoQuant emphasizes that during the bullish phase, the inflow of new capital leads to an increase in the realized market capitalization, as BTC will change hands higher than its initial purchase price.

At the same time, market capitalization will experience more rapid growth due to market price revaluation. Notably, historical data shows that BTC market cap expanded 3 to 5 times during previous market peaks, such as December 2017, March 2022, and November 2022, indicating that for every $1 of new investment, the market cap increased by $3 to 5.

The study also highlights that the expected spike in market capitalization will outflow into GBTC funds during the last bull cycle. GBTC is currently the largest BTC fund, holding more than 620,000 BTC.

In addition, the analysis also suggests that the expected increase in BTC's market cap could lead to a significant increase in the BTC price, ranging from $50,000 to $73,000.

CryptoQuant's findings echo a view recently shared by Crypto analyst Robin C, who tweeted: "BTC may reach $60,000-70,000 after ETF approval." ”

According to the expert, the upcoming ETF approval will lead to an influx of $150 billion to $200 billion into the BTC world.

Optimism in the crypto community has been rising in anticipation that the SEC may approve various spot ETF applications filed by well-known financial firms such as BlackRock, Ark Invest, and Fidelity.

But the timeline for the SEC's approval of the first spot BTC ETF remains uncertain, and this uncertainty has persisted as regulators continue to show a tendency to tighten regulation of crypto assets.