Spot Bitcoin ETF Price Predictions!
How High Will BTC Go?!
how high could btc's price go when the spot ETFs are approved this is what everyone's been wondering and speculation about the answer is what's been driving the crypto Market over thelast few months well it seems we may finally have an answer glass node recently published a report which estimated that BTC could see as much as70 billion dollar of buying pressure
when a spot Bitcoin ETF is finally approved so today we're going to tell you what the report said and what it could mean for the crypto Market the report will be summarizing
Crypto Market Overview today is titled quote Finance bridge Spotlight on spot Bitcoin ETFs and their impact as I mentioned in the introduction it was published by onchain
analytics platform glass node last week and we'll leave a link to the report in the description if you're interested now the report begins with abrief overview of what's been going on in the crypto Market the authors note that btc's price increased by a whopping 28% in October bringing its year-to-date gains to over 100% or 2x news flash this makes BTC one of the best performing assets of the Year you'll remember that this impressive October rally was driven almost exclusively by speculation about a spot Bitcoin ETF approval something that the authors underscore in the report they also highlight the fact that there's been heightened institutional interest in BTC as per trading volume on the CME for context the Chicago mertile Exchange or CME is a tradire Exchange that offers BTC and eth Futures naturally most of its trading volume
comes from large institutional and high net worth investors as such high BTC trading volume on the CME suggests they are interested in BTC however it's important to note that the CME trades paper instruments Futures contracts meaning that no actual BTC changes hands this means that CME trading has no direct impact on btc's spot price even so it does give you a sense of just how much investment could come into a spot
Bitcoin ETF once it's approved anyways the authors took a second to also touch on eth which only pumped by around 9% in October and soul which pumped by whopping 80% in October the authors take this as a sign that the broader crypto Market is in recovery in other words we're nearing the end of the crypto be Market that said the focus is still very much on BTC and the authors admit that updates about the spot Bitcoin ETF filing are what have been driving the crypto Market as a fun fact trading Bots are now tracking the tweets of Bloomberg's ETF analysts on Twitter and they've been pumping BTC whenever the ETF is mentioned and speaking of Bloomberg's ETF analysts the authors note that these analysts notably Eric balunas and James saart believe there is
a 90% chance that a spot Bitcoin ETF will be approved by January some would say that this now consensus view could set the stage for a huge upset but well let's not go there anywh who the authors also recount how the SEC failed to appeal the Court's decision in grayscales lawsuit against the regülatör over gbtc for reference grayscale sued the SEC
Derivatives And Institutions
institutional interest in BTC now to put things into perspective the CME recently became the largest Futures exchange for BTC by trading volume this is significant because it's the first time that it's happened it's also the first time that a trafi exchange has flipped a crypto exchange namely binance and it's not just Futures either the authors note that the open interest in Bitcoin call options surged to almost 10 billion the highest since the crypto bull market for those unfamiliar options give you the option to buy an asset at a specific price at some predetermined point in time as you might have guessed Traders will buy call options when they believe that the price of an asset will be higher at that future date in this case BTC the authors note that this is
evidence of the crypto Market becoming more mature but there are two important caveats here the first is that most of BTC options trading takes place on deribit not the CME given that deribit is a crypto exchange it's harder to say whether this is evidence of trfi institutional interest in case you're wondering the open interest on deribit is currently 15 times higher than it is on the CME for options and this ties into the second caveat and that's that the open interest for BTC has increased since October it currently stands at almost 20 billion as you can see this is the highest level of of open interest on record I should note that call option interest is closer to 13 billion so 30% up compared to the glass Noe stat in any case the authors contrast this explosion in derivatives trading to the percentage of BTC that's being huddled in October a staggering 76% of btc's Supply was being huddled another record high in Practical terms this means that btc's price is likely to be much more volatile in the coming weeks if you're wondering why that's because the less BTC there is on exchanges the less Market depth there isand the less Market depth there is the easier it is to push btc's price up or down some have argued that the high percentage of BTC being hled could be a barrier to an ETF approval for this reason regardless the authors take this hodle statistic as evidence that most BTC holders believe that its price will continue to go up in the medium to long term that's because these hodlers are in profit and yet they refuse to take profits the only reason they wouldn't is if they thought prices would go higher and if you happen to be interested in trading this upward volatility or huddling through it then check out thecoin Bureau deals page it's got trading fee discounts of up to 60% and bonuses of up to $40,000 on the best crypto exchanges as well as the biggest discount on the best hardware wallets the link will be down in the description
BTC would correspond to a $3 increase in market cap for large Investments obviously what this means is that if the spot Bitcoin ETFs see 70 bill billion doar of inflows like the authors predict then btc's market cap would increase by $210 billion this would translate into a BTC price of around 50k which actually isn't that far off from btc's current price levels at the time of shooting now believe it or not but the authors advise
any institutional investors reading to invest in BTC when its price is this sensitive to inflows as they'll get more bang for their Buck conversely they advise these investors to stay away from BTC when its price is less sensitive to inflows as the returns may not be as big
What It Means For Crypto
so this brings us to the big question and that's what all this means for BTC and the crypto Market by now you'll know the short answer btc's price will pump when a spot Bitcoin ETF is approved the only question is how much bu and glass no's report seems to have given us a range of what to expect as I just mentioned a few moments ago the $70 billion of inflows the authors predict could pump BTC up to around 50k this would translate to a rally of 20 to 25% assuming all those inflows come at once as the authors noted Galaxy digital estimates that these inflows will come over a prolonged period if
Galaxy digital's estimate of $14 billion in initial inflows is correct then this would increase btc's market cap by $32 billion per glass nodes realized cap of Bitcoin indicator this would translate to a more modest pump of around 5% bringing btc's price up to around 40K compared to today's price of around 37k there's just one problem with this analysis and that's that the impact of these flows goes both ways the 3x Factor applies to selling too to refresh your memory JP Morgan estimated that the spot Bitcoin ETF derived from gbtc could experince up to 2.7 billion in selling pressure this is based on the assumption that the $2.7 billion of buying pressure gbtc has seen since the start of the year was driven primarily by institutional investors who wanted to capitalize on this Arbitrage trade the thing is that this likely underestimates the amount of gbtc selling by a wide margin take a second to consider that gbtc currently holds almost $23 billion of BTC now consider that digital currency group the parent company of grayscale holds as much as 10% of gbtc total Supply I should note that this is based on data from November last year so it may be outdated what is not outdated however is the fact that dcg still owes billions of dollars to creditors and has
been selling assets to plug the hole coindesk being a recent example depending on dcg's financial situation at the time of the spot Bitcoin ETF conversion it could could sell some or all its gbtc to payback creditors here is where things get a bit crazy whereas the buying pressure for a spot Bitcoin ETF would likely come over the course of weeks or months the selling pressure from the gbtc conversion would likely happen much faster given that investors would want to capitalize on that unrealized gain as soon as possible now at first glance this doesn't seem to be a big deal even if we assume a combined cell pressure of five billion from dcg and other gbtc investors this would only amount to a $15 billion change in btc's market cap which would likely correspond to a dip of no more than a couple of percentage points at best upon closer
inspection however you realize that BTC investors are extremely bullish about the prospect of a spot Bitcoin ETF approval this is evident in the size of call options and long positions in the derivatives Market along with sentiment readings which are hitting their greediest levels since 2021 it's safe to assume that the long leverage and the bullish sentiment will go parabolic when the spot Bitcoin ETFs are approved this
means that the few billions of dollars of selling pressure from gbtc arbitrages would likely result in liquidations that could take btc's price much lower than people expect this would coincidentally mirror what happened to Gold after its spot ETF was approved in 2003 a decline of 10% or more in the first weeks that followed but as we've learned what comes after that will be the biggest gains the financial world has ever seen BTC literally going to the moon and just wait until that money starts rotating into altcoins it will be a bull market for the history
