How High Will BTC Price Go When a Spot ETF is Approved?
Bitcoin ETF Price Predictions – Recent reports suggest that BTC’s price could see significant buying pressure when a spot Bitcoin ETF is finally approved. Glassnode, an on-chain analytics platform, estimated that BTC could see up to $70 billion of buying pressure when a spot Bitcoin ETF is approved.
The report provided a breakdown of the potential inflows, with around 60% coming from ETFs tracking the S&P 500, the Vanguard Total Stock Market ETF, and the Vanguard Total Bond Market ETF, while 10% would come from gold’s market cap.
However, the report also noted that there could be sell pressure from Grayscale Bitcoin Trust (GBTC) when it converts to a spot Bitcoin ETF. J.P. Morgan estimated that the GBTC Converted ETF could experience up to $2.7 billion in selling pressure.
The exact impact of these flows on BTC’s price is uncertain, but the overall consensus is that BTC’s price will see significant movement when a spot Bitcoin ETF is approved. The exact magnitude of the price increase, however, will depend on the actual inflows and outflows from the ETFs.
GBTC and Spot Bitcoin ETF
Currently, GBTC holds almost $23 billion in Bitcoin. This data is from November last year, so it may be outdated. Digital Currency Group (DCG), the parent company of Grayscale, holds up to 10% of GBTC’s total supply. DCG owes billions of dollars to creditors and has been selling assets to cover the debt.
The selling pressure from the GBTC conversion could happen much faster than the buying pressure for a Spot Bitcoin ETF. Investors would want to capitalize on the unrealized gain as soon as possible. Although this may not seem like a big deal, a combined selling pressure of $5 billion from DCG and other GBTC investors would only amount to a $15 billion change in Bitcoin’s market cap.
How High Will BTC Go?
Bitcoin investors are extremely bullish about the prospect of a Spot Bitcoin ETF approval. This is evident in the size of call options and long positions in the derivatives market, along with sentiment readings hitting their greediest levels since 2021. When the Spot Bitcoin ETFs are approved, the long leverage and bullish sentiment will likely go parabolic.
This means that the few billions of dollars of selling pressure from GBTC arbitrages could result in liquidations that take Bitcoin’s price much lower than people expect. This mirrors what happened to gold after its Spot ETF was approved in 2003, which experienced a decline of 10% or more in the first weeks that followed.
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However, what comes after that will be the biggest gains the financial world has ever seen, with Bitcoin going to the moon and altcoins experiencing a bull market for the history books.