What if the Spot Bitcoin ETF is approved? Galaxy Digital’s predictions for the first year

Crypto venture Galaxy Digital, led by US billionaire Mike Novogratz, has predicted a huge influx of capital into the space's Bitcoin exchange-traded funds (ETFs). According to the estimates, these ETFs could witness an impressive inflow of $14.4 billion in the year of their inception, which could shape the investment landscape.

The venture argues that the appeal of spot Bitcoin ETFs exceeds existing investment avenues, such as trusts and futures, which currently hold more than $21 billion in assets. He sees ETF revenue rising by $27 billion in the second year and $39 billion in the third year.

Bitcoin ETFs could reshape wealth management.

The potential problems with this prediction are profound. This forecast shows not only an increase in investor interest, but also a change in the approach to cryptocurrency investing.

As of October 2023, Galaxy Digital has confirmed that the wealth management sector in the United States will see significant change, with assets managed by brokers, banks and registered investment advisors (RIAs) totaling $48.3 trillion.

According to Galaxy, Bitcoin ETFs stand as a major development, promising a safe and regulated way for investors to gain exposure to the cryptocurrency. These products are facilitated by established partners, mainly traditional funds and banks with good experience in customer protection and good investment offerings.

Meanwhile, recent market dynamics have shown interest in Bitcoin-based financial products. Last week's rumor alone resulted in an unprecedented 10% increase in the price of Bitcoin within hours. Additionally, the mere mention of BlackRock's proposed Bitcoin ETF surged 12% on Monday, compellingly demonstrating the market's reaction to ETF growth.

Is Bitcoin Set For A 74% Increase?

Galaxy Digital predicts $14.4 billion in inflows in the first year, contributing significantly to 74% of Bitcoin's price increase. This expected increase is based on the assumption that the volume and price impact of billions of dollars in investments will change the value of cryptocurrency.

The limited availability of existing investment products further highlights the urgency for these space Bitcoin ETFs. High fees, small amounts and tracking errors are chronic issues that have hindered access for many investors.

According to Galaxy, in addition to alleviating these existing challenges, spot EFAs promise greater operational efficiency. That includes advantages in payment structures, liquidity and price tracking. While specific fee details for Bitcoin ETF applicants have yet to be disclosed, historical data indicates that these products generally offer lower fees than hedge funds or closed-end funds.

The US Securities and Exchange Commission (SEC) is reviewing applications from various industry players. Grayscale, BlackRock, Bitwise, VanEck and several other prominent firms have submitted proposals for spot Bitcoin ETFs, twelve in total. This dynamic reflects the growing consensus on the potential of Bitcoin ETFs and the competitive nature among industry leaders who want to pioneer this dynamic financial instrument.