50 billion US dollars in three years, how much long-term and short-term funds will the Bitcoin spot ETF bring?

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南枳
1 months ago
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How analysts at various institutions arrive at these numbers.

Original - Odaily

Author - Nan Zhi

50 billion US dollars in three years, how much long-term and short-term funds will the Bitcoin spot ETF bring?

What are the expectations for short-term inflows?

Bloomberg ETF Analyst: $4 billion on first day

Eric Balchunas, senior ETF analyst, Bloombergexpress, BlackRock could inject money into its Bitcoin spot ETF on first day of trading$2 billion in funding, breaking the first-day capital inflow record. The seed funding could provide BlackRock with a boost in the race for 11 Bitcoin spot ETFs.

Eric Balchunas believes all these Bitcoin spot ETFs could raise up to$4 billion in funding, and raising $50 billion in funding within two years.

On January 9, BlackRock launched its Bitcoin spot ETFInjected US$10 million in seed funding. In addition, VanEck has injected $72.5 million in seed funding, and Bitwise’s seed funding is even higher at $200 million.

(Odaily note: Seed capital usually refers to the initial capital or startup capital used to create and launch an ETF. When an ETF is initially launched, it requires a certain amount of funds to purchase the underlying assets, build an investment portfolio, and pay other startup costs, such as Legal, administrative and marketing expenses.)

Valkyrie: $5 billion in weeks

Steven McClurg, co-founder of Valkyrie Investmentsexpress, Valkyrie expected$200 million to $400 million to flow into its ETF in first week; It is expected that the first batch of 10 ETFs will be launched at the same time, and the entire market willInflows set to hit $4 billion to $5 billion in weeks

VanEck head of research: $2.5 billion in Q1

Matthew Sigel, head of digital asset research at VanEck, also previouslypublished similar data, he learned from a source that there have beenMore than $2 billion awaits infusion of BlackRocks Bitcoin spot ETF in first week after listing, the funds come from existing Bitcoin holders who are adding to their positions.

However, Matthew Sigel said that US$2 billion on the first day will be a value that exceeds expectations. He expectsTransaction volume in Q1 was $2.5 billion, based on past inflows into the first gold ETF and adjusted for the U.S. money supply. According to similar analyses, we will have a $40 billion market opportunity within two years.

Galaxy Digital head of research: $1.44 billion in first year

Head of Research at Galaxy DigitalAlex Thorn saidIt is estimated that in the first year, the Bitcoin spot ETF may bring in $1.44 billion in capital inflows, which is based on an analysis of the wealth management industry. They further predicted,Inflows could increase to $2.65 billion in second year. Alex emphasized that these inflows are considered net incremental funds, that is, these funds would not flow into the Bitcoin market without ETFs. Alex mentioned that inflows into ETFs do not happen immediately but gradually. In their analysis, as the Bitcoin market grows, the impact multiplier decreases each month as the share of Bitcoin in investment vehicles increases with the total market capitalization.

And Cathie Wood was previously inIn an interview with CNBC, he also said, if the Bitcoin spot ETF is approved, it will not be a situation where all the benefits are exhausted, she said: Based on our five-year investment horizon, we believe that the inflows into this new asset class, especiallyInstitutional funding will be considerable. It doesn’t take much institutional allocation to Bitcoin to push the price of what is becoming a scarce asset much higher. But no specific amount was predicted.

Existing market size

According to Galaxy statistics, as of September 30, 2023, the total number of Bitcoins held by Bitcoin investment products (including ETPs and closed-end funds) was 842,000 (approximately $21.7 billion).

In addition, evidence1kx Research Statistics, the current cryptocurrency ETP with the largest AUM (asset management size) is ProShares Bitcoin Strategy ETF, a US futures ETF product with assets of US$1.68 billion as of January 2, 2024.

As shown in the table below, 9 of the 14 top cryptocurrency ETPs by asset size track Bitcoin (64%), with 3 of the remaining five tracking Ethereum, 1 tracking Solana, and 1 tracking BNB.

the following14 top ETP AUM combined ~$9.5 billion, the Bitcoin Spot ETF is expected to be significantly larger than that.

50 billion US dollars in three years, how much long-term and short-term funds will the Bitcoin spot ETF bring?

How much money will it bring in the long term?

In the previous article, Bloomberg senior ETF analyst Eric Balchunas and VanEck head of digital asset research Matthew Sigel both mentioned the long-term market size. The former believes that it will bring about within two years.$50 billion in funding, the latter believes that within two years there will be$40 billioninflow.

Standard Chartered Bank gavehigher expectations, which stated that if the Bitcoin spot ETF is approved,Could attract $50-100 billion in 2024of capital inflow. This will push Bitcoin prices to $200,000 by the end of 2025. Standard Chartered came to this conclusion through a comparative analysis of Bitcoin spot ETFs and gold ETFs.

(Note: As of the time of publication, the circulating market value of Bitcoin is US$913.2 billion.)

Galaxy long article analysis: 39 billion in three years, ultimate goal of 450 billion US dollars

Galaxy Researcher Charles Yu, Based on capital accessibility, the U.S. wealth management industry is the most accessible and immediate market from which an approved Bitcoin ETF would derive the most net new accessibility. As of October 2023, broker-dealers ($27 trillion), banks ($11 trillion) and RIAs ($9 trillion) had a combined $48.3 trillion in assets under management.

(Odaily note: RIA is a registered investment advisor, Registered Investment Advisor)

The U.S. wealth management aggregator selected by Galaxy uses $48.3 trillion as the benchmark TAM (Total Addressable Market), although the target market of the Bitcoin ETF and the indirect impact of the approval of the Bitcoin ETF may extend far beyond the U.S. wealth management channel and may Attract more funds into the Bitcoin spot market and investment products.

As channels open up, the admission cycle of Bitcoin ETFs in these areas may last for several years. RIA channels are the first to enter the market and have a larger share of initial visits. For bank and broker-dealer channels, entry periods will be determined individually for each platform.

Galaxy assumes the RIA channel will start growing at 50% in year one and increase to 100% in year three. For the broker-dealer and bank channels, we assume slower growth starting at 25% in the first year and steady growth to 75% in the third year. Based on these assumptions, we estimate the addressable market size for a U.S. Bitcoin ETF to be approximately $14 trillion in the first year after launch, approximately $26 trillion in the second year, and $39 trillion in the third year.

Based on these market size estimates, if we assume that 10% of available assets in each wealth channel are in Bitcoin, with an average allocation of 1%, we estimate that the Bitcoin ETF willThere will be an inflow of $14 billion in the first year, rising to $27 billion in the second year, and $39 billion in the third year.

In the short term, Galaxy expects other global/international markets to follow the U.S.s lead and approve and make similar Bitcoin ETF products available to a wider range of investors. In addition to ETF products, a variety of other investment vehicles may add Bitcoin to their investment strategies.

In the longer term, the addressable market for Bitcoin investment products is likely to expand further to all third-party managed assets (around $126 trillion in AUM, according to McKinsey) and even more broadly to global wealth (according to UBS data, which is US$454 trillion). Some believe that as Bitcoin monetizes, it will systematically reduce the monetary premiums applied to other assets such as real estate or precious metals, thereby significantly expanding Bitcoins TAM.

Based on these market sizes, and holding our adoption/allocation assumptions constant (10% of funds adopt Bitcoin, with an average allocation of 1%), Galaxy estimates that over the long term,Potential new incremental inflows into Bitcoin investment products will range from $125 billion to $450 billion.

Summarize

Regarding short-term capital inflows, market opinions vary greatly. The shortest capital injection reaching the 4 billion level is expected to be in a few days, and the longest is expected to be years. But all parties agree on the long-term impact, with inflows estimated at $40 billion to $50 billion over three years. The most important thing is that the adoption of Bitcoin spot ETF means the gradual opening of global allocation channels. With the gradual opening and acceptance of various countries, the future will be a sea of ​​stars.

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