Spot Bitcoin (BTC) exchange-traded funds (ETFs) are projected to attract an estimated $220 billion in investment over the course of the next three years.
A research report conducted by broker JMP Securities suggests that this substantial influx of capital could potentially lead to a fourfold increase in BTC’s price, reaching $280,000, considering the impact of new investments.
Analysts at JMP Securities emphasized that if their predictions regarding capital inflows materialize, crypto exchange Coinbase (COIN) would be well-positioned to benefit from this trend.
As a result, the brokerage firm has raised its price target for Coinbase stock to $300 from $220, marking the highest target among Wall Street analysts, while maintaining a market outperform rating.
Currently, Coinbase shares are trading 2.6% higher at $262.92.
There is potential for further growth in ETF inflows.
Despite already exceeding expectations by amassing $10 billion in inflows just two months following their launch, JMP Securities believes that the current level of activity and inflows in spot bitcoin ETFs are only scratching the surface. They anticipate a significant increase in flows as ETF approval marks just the beginning of a broader process of capital allocation.
The analysts, led by Devin Ryan, project that an additional $220 billion in incremental flows will enter the ETFs over the next three years. They emphasize the potential impact on bitcoin’s price, considering the multiplier effect on capital.
Explaining further, the analysts highlight that if their estimated net ETF inflows of $220 billion materialize and considering the current capital multiplier of approximately 25X, this alone could lead to a substantial increase in bitcoin’s market capitalization, amounting to $5.5 trillion or $280,000 per bitcoin.
In a noteworthy milestone, spot bitcoin ETFs experienced a daily record of net inflows totaling 14,706 Bitcoins, valued at over $1 billion, on Tuesday.
This achievement establishes a new record for the highest single-day net inflow since the inception of Bitcoin spot ETF trading, representing an impressive 56% increase compared to the net inflow of $673 million recorded on February 28.
Separately, JPMorgan’s analysis indicates that the bitcoin spot ETF market could expand to approximately $62 billion within the next two to three years, as outlined in a report released by the bank last week.
The launch of Bitcoin ETFs marks the most successful debut in the history of ETFs.
The launch of Bitcoin ETFs has marked a historic milestone, establishing itself as the most successful debut in the extensive history of Exchange-Traded Funds (ETFs). Within the previous week alone, these innovative financial products have amassed an impressive accumulation of over 30,000 BTC, amounting to a staggering total of close to $30 billion.
This remarkable surge in Bitcoin ETF adoption underscores a significant shift in institutional interest towards cryptocurrency investments. Indeed, the continued trend of institutional inflows into Bitcoin has sparked speculation about the potential emergence of a groundbreaking phenomenon – a Bitcoin ETF liquidity crisis. Ki Young Ju, CEO of the renowned on-chain analytics platform CryptoQuant, has forecasted a watershed moment in the supply dynamics of BTC within the next six months.
Ki Young Ju emphasized that the sustained influx of institutional capital into spot Bitcoin ETFs could lead to an unprecedented scenario where the demand for Bitcoin surpasses the available supply. Such a scenario could trigger a sell-side liquidity crisis, characterized by a scarcity of sellers and a thinner order book in the market. Consequently, this liquidity crunch could exert significant upward pressure on the price of Bitcoin, potentially resulting in a higher cyclical peak for the cryptocurrency.
In summary, the unprecedented success of Bitcoin ETFs and the prospect of a looming liquidity crisis highlight the evolving dynamics of institutional participation in the cryptocurrency market. As long as institutional inflows into Bitcoin persist, it is anticipated that bears will face formidable challenges in gaining dominance in the market, setting the stage for potential bullish price movements in the cryptocurrency landscape.
