H2: Expert Report on Bitcoin ETFs and Price Impact
H3: Relationship Between ETF Inflows and Bitcoin Price
In a recent report by CoinShares, analyst James Butterfill delves into the relationship between inflows into Bitcoin exchange-traded funds (ETFs) and changes in the Bitcoin price. The report addresses the critical question of how much inflow into ETFs could be anticipated upon launching a Bitcoin spot ETF in the US and the potential impact of these flows on the Bitcoin Price (“CoinShares Report”).
Bitcoin ETFs Could Attract $14.4 Billion Inflows
Butterfill highlights Galaxy’s analysis, which estimates that the United States has approximately $14.4 trillion in addressable assets. Assuming a conservative scenario where 10% of these assets invest in a spot Bitcoin ETF with an average allocation of 1%, it could result in approximately $14.4 billion of inflows within the first year. This would mark the largest inflows on record, surpassing 2021’s inflows of $7.24 billion, which accounted for 11.5% of assets under management (AuM) (“Galaxy’s Analysis”).
The report suggests a correlation between inflows as a percentage of AuM and price changes. Inflows coincide with rising prices, indicating that many ETF investors engage in momentum trading (“CoinShares Report”).
Bitcoin Price Surge Predicted
By analyzing weekly ETP flows and their percentage of AuM, the report identifies a trend with a coefficient of determination (R2) value of 0.31, suggesting a discernible relationship between flows and price changes (“CoinShares Report”). Utilizing this trendline, the report estimates that the aforementioned $14.4 billion of inflows could potentially drive the price of Bitcoin up to $141,000 per coin.
It emphasizes that regulatory approval and corporate acceptance are gradual processes due to Bitcoin’s perceived complexity, which may require corporations and funds to build knowledge and confidence before committing to investment (“CoinShares Report”).
Ultimately, CoinShares believes that Corporations and funds may require an extended period to familiarize themselves with the asset class and gain confidence before entering the market (“CoinShares Report”).
All in all, the CoinShares report sheds light on the potential impact of Bitcoin ETFs on the price of BTC. While it is challenging to precisely determine the level of inflows and their subsequent effect on the market, the report suggests that launching a Bitcoin spot ETF in the US could potentially drive the price of Bitcoin to US$141,000 per coin.
Currently, Bitcoin (BTC) is consolidating above the significant psychological level of $36,000. Over the past 24 hours, it has experienced a minimal decrease of 0.2%, while showing a 1.3% increase within the 1-hour time frame (“BTC Price Movement”).
Image Source: BTCUSDT on TradingView.com
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About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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