Spot Bitcoin (BTC) ETFs Could Bring $30 Billion in New Demand: NYDIG

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Exchange-traded funds (ETFs) based on Bitcoin (BTC) could bring $30 billion in new demand for the world’s largest digital asset, according to the recent research report from crypto trading firm NYDIG.

Spot-ETF fever has gripped the crypto market in recent weeks, thanks to filings from BlackRock (BLK), Fidelity and others.

Recognition of the BlackRock brand and iShares franchise, familiarity with methods of buying and selling through stockbrokers, and simplicity in position reporting, risk measurement, and tax reporting, a cash ETF could provide notable advantages over existing alternatives, NYDIG writes in its report.

Already, NYDIG has modeled that there are $28.8 billion in bitcoin assets under management with $27.6 billion in spot products.

Bitcoin is often referred to as digital gold, so there are bound to be comparisons to the gold ETFs listed in the early 2000s. Currently, gold ETFs only hold 1.6% of the total gold supply. global gold, NYDIG points out, compared to 17.1% for central banks, while bitcoin funds hold 4.9% of total bitcoin supply.

There is a huge chasm in demand for the digital and analog version of the asset in funds: there is over $210 billion invested in gold funds compared to just $28.8 billion in bitcoin funds .

Bitcoin is approximately 3.6 times more volatile than gold, which means that on an equivalent volatility basis, investors would need 3.6 times less bitcoin than gold on a dollar basis to be as much exposed to risk. Still, that would drive nearly $30 billion in additional demand for a bitcoin ETF, NYDIG writes.

GLD ETF filled an important void in the market, writes Ecoinometrics, by providing an easily tradable product that tracked the price of physical gold.

However, comparisons between gold ETFs and bitcoin ETFs are potentially misleading, as the significant rise in gold during this period was largely due to a favorable macroeconomic environment and a weakening market. dollar. Remember the War on Terror, the rise of China, and the start of a soaring US deficit, all within a decade?

“So while the GLD ETF certainly didn’t hurt and likely made some nice entries into the gold market, the macro was very much in the driver’s seat during this period,” they write. they. “A spot Bitcoin ETF can help spark more interest in Bitcoin and will no doubt attract fresh money into the space. But it won’t make a Bitcoin worth $100,000 on its own.”

The true potential of a Bitcoin ETF lies in a confluence of factors: the launch of the ETF, a weaker US dollar, a move by the Federal Reserve towards quantitative easing, and a generational transfer of wealth to more likely young people. to invest in crypto, they write.

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