Bitcoin Revival Could Drive New Crypto Cycle

Bitcoin Revival Could Drive New Crypto Cycle

Bitcoin Revival Spot ETFs: A Market Catalyst

Bernstein highlights the role of crypto ETFs in introducing capital to the market, not solely by creating demand in the spot market but by acting as a regulatory signal for growth. This regulatory green light tends to set off a chain reaction of increased participation from both retail and institutional investors seeking to align with a regulated investment environment. The report notes the growing interest from global asset managers in Bitcoin revival and the potential resolution of U.S. Securities and Exchange Commission (SEC) concerns, which has raised the probability of approval.

Growth Expectations

Analysts led by Gautam Chhugani predict a significant potential for the spot Bitcoin ETF market. The report suggests that this market could represent a substantial portion, potentially reaching 10% of Bitcoin’s market capitalization within two to three years.

SEC’s Ongoing Evaluation

As the SEC extends its review of applications, including the Ark 21Shares Bitcoin ETF, the crypto ETF landscape becomes increasingly dynamic. Established financial giants like BlackRock and Fidelity Investments are also in the regulatory queue, adding further weight to the emergence of crypto ETFs.

Benefiting from Strong Marketing Push

The report highlights the advantageous position of cryptocurrency ETFs due to robust brand marketing initiatives by prominent global asset managers. Additionally, efforts by retail brokers and financial advisors to promote these products are anticipated to bolster their influence.

Diverse Capital Inflows

Bernstein identifies multiple sources of potential capital inflow that could fuel a new cycle of growth in the crypto market. Fresh stablecoin supply and tokenization of traditional assets will strongly impact the market dynamics. Besides, native crypto infrastructure tokenization and ETF introductions are all expected to contribute to this cycle. For instance, the on-chain assets maintained a $40 billion range this year. However, stablecoins continue to circulate around $120 billion, as per the report’s observations.

Bitcoin Bull Run: More ETF Decisions on the Horizon

The analysis points to forthcoming decisions concerning various Bitcoin ETFs. The Bitwise Bitcoin ETP Trust is under scrutiny, with a decision deadline of September 1st, according to Bloomberg Intelligence. Following closely, decisions for applications from BlackRock, VanEck, WisdomTree, and Invesco are expected a day later, with other evaluations also in the pipeline. This succession of decisions underscores the market’s keen anticipation of the regulatory outlook for Bitcoin ETFs.

Heightened Expectations

The ongoing anticipation for regulatory approval of Bitcoin ETFs has generated considerable interest across the crypto community and traditional financial spheres. The involvement of asset management giant BlackRock adds further momentum, given the company’s track record in successfully launching ETFs.

Spot-Bitcoin ETF Demand and Bitcoin Investing Forum

Enthusiasm for a spot Bitcoin ETF has been growing for years, driven by the notion that such a product could make Bitcoin investment more accessible and bridge the gap between digital assets and traditional financial markets. However, regulators have consistently expressed concerns regarding fraud and manipulation, leading to cautious decision-making. Notably, the SEC rejected the first physically-backed Bitcoin ETF application by Gemini, founded by Tyler and Cameron Winklevoss, in 2013.

Expanding Horizons: Beyond Bitcoin ETFs

Recent market enthusiasm has emboldened entities to explore a wider range of investment vehicles beyond the Bitcoin revival. Several companies have submitted applications for ETFs related to Ether-futures or even combined Bitcoin-and-Ether-futures funds, indicating a broader diversification of ETF offerings. Notably, these innovative ETF types are not yet traded in the U.S., and the SEC’s rejection of Ether-futures ETFs earlier this year showcases the evolving regulatory landscape.