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- 1 Massive inflows are projected on Day 1 of trading for recently approved spot BTC ETFs.
- 2 Estimates range from $1 billion to over $4 billion entering the Bitcoin market via funds.
- 3 Analysts predict buying pressure could boost prices past the $50K threshold.
The long wait for spot bitcoin exchange-traded funds (ETFs) in the US finally ended this week after repeated failed attempts, when the Securities and Exchange Commission (SEC) delivered its historic approvals.
However, the real excitement now shifts to these ETFs’ first day of trading as analysts broadly anticipate massive inflows that could significantly impact Bitcoin’s price discovery.
Spot Bitcoin ETF Trading Debut Could Propel Price Past $50,000
This week, the crypto industry witnessed history when the United States Securities and Exchange Commission (SEC) approved several fund managers to launch spot bitcoin exchange-traded funds (ETFs). This milestone comes precisely 15 years after the first-ever Bitcoin transaction, marking a symbolic moment in its journey.
Despite the long-awaited ETF approvals, Bitcoin’s price remained largely stable at around $46,000, having already factored in expectations. However, as these ETFs commence trading, massive inflows could exert buying pressure and increase prices.
Potential for Unprecedented Day 1 Inflows
Early estimates project staggering capital inflows on Day 1 of the spot bitcoin ETFs trading. Bloomberg predicts a record-breaking $4 billion entering the Bitcoin market on the first trading session across approved ETFs.
Specific issuers have ambitious goals – BlackRock hopes to attract $2 billion into its fund alone, as per Bloomberg Intelligence. Bitwise confirmed over $100 million in investor commitments for the launch day.
Such intense competition for market share points to issuers’ confidence around substantial demand. Lower fee structures aim to incentivize higher inflows from institutional investors.
Past examples also showcase potential. Standard Chartered estimates that 2024’s inflows will reach $50-100 billion, with Bitcoin prices touching $200,000 by the end of 2025.
Buying Pressure Still To Materialize
Alistair Milne, CIO of Altana Digital, explains Bitcoin’s muted price reaction so far: “Everyone who wanted in before the ETF seems to be in. Only after 9.30 am tomorrow can the ETFs start accepting capital and acquiring Bitcoin.”
Once live trading opens floodgates to direct ETF participation, pent-up buying pressure would get released into Bitcoin markets and could meaningfully impact prices.
Scenario Analysis for Price Outlook
If total Day 1 inflows match Bloomberg’s $4 billion estimate per British HODL, a liquidity provider, Bitcoin could attempt the $50,000 threshold relatively quickly. However, even $1-2 billion coming in, as projected by FalconX CEO Raghu Yarlagadda, would likely lift prices per analysts.
On the flip side, if sub $1 billion enters Bitcoin through these ETFs on Day 1, some see an adverse price reaction due to unmet expectations before stability returns.
Conclusion
As the first set of spot bitcoin ETFs in the US roll out this week, experts project massive inflows that could propel prices higher in the short term.
However, Bitcoin’s reaction will ultimately depend on actual capital entering versus expectations built up over years awaiting these products.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
