Over the past few weeks, the cryptocurrency world has been awash in a wave of optimism, fueled by the possibility of a Bitcoin exchange-traded fund (ETF). Matt Hougan, CEO of Bitwise, one of the largest cryptocurrency index fund managers, shared his views on this matter and his predictions are undoubtedly exciting.
Hougan estimates that in the first year after the launch of a spot Bitcoin ETF, a capital flow of approximately $5 billion could be directed into the product. “Based on previous ETF records, the US$5 billion mark in the first year is completely viable”, comments the CEO.
But what really caught the crypto community’s attention was Hougan’s long-term projection. He believes that within the first five years after launch, a staggering $50 billion could be injected into Bitcoin through the ETF. This estimate, according to him, is derived from observation of other markets where Bitcoin ETFs represent approximately 1% of the market when they reach maturity.
Furthermore, Hougan highlighted that the US ETF market is valued at around $7 trillion. If we consider just 1% of this value, we have US$70 billion. Discounting the US$20 billion already present in the Grayscale Bitcoin Trust (GBTC), we arrive at the figure of US$50 billion.
Another relevant point discussed by Hougan is the potential impact of a spot Bitcoin ETF on the price of the cryptocurrency. He suggests that the new demand resulting from the ETF, combined with decreased supply due to the Bitcoin halving, could create a bullish scenario for the digital asset.
Hougan mentioned a study conducted by ARK that predicts a 15x value multiplier for Bitcoin following the launch of an ETF. However, he emphasizes that, despite finding merits in the study, he does not fully endorse it. “The reality is that we are still navigating uncharted waters when it comes to assessing the impact of growing demand on an asset with inelastic supply”, ponders the CEO of Bitwise.
In concluding, Hougan emphasized that while the cryptocurrency market may present its complexities and risks, the combination of a new ETF with the upcoming Bitcoin halving will certainly shape the landscape in the coming years. At the time of publication, the price of BTC was quoted at US$33,973.96, down 2% in the last 24 hours.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing in or trading cryptocurrencies carries a risk of financial loss.