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19-10-2023 07:17

Matrixport on BIT - Bitcoin ETF Approval Sets Stage for Massive $24-50 bn Fiat Rush

Executive Summary 

In our 2023 outlook report, published on December 9, 2022, ‘Matrix onTarget’ boldly projected a substantial crypto rally, driven by factors like lower US inflation and favourable macroeconomic conditions. This foresight not only anticipated strong rebounds for Bitcoin and Ethereum, but also predicted a significant drop in volatility. 

GBTC (Grayscale Investments’ Bitcoin Trust) share prices have remarkably surged by 167% year-to-date, significantly outperforming Bitcoin’s 71% growth. At the year’s outset, GBTC’s net-asset-value (NAV) discount was -45%, slightly narrowing to -43%. However, the game-changer came when Black Rock announced its ETF application on June 15, 2023. 

Our earlier reports analysed the 15,000-strong US registered investor advisor (RIA) community overseeing around $5 trillion. This group holds immense potential, and even a modest 1% allocation recommendation for Bitcoin would usher in around $50 billion in inflows. Drawing a parallel with precious metals ETFs, estimated at approximately $120 billion in market cap, and assuming that between 10-20% of precious metal ETF investors look at a Bitcoin ETF to diversify their monetary debasement and inflation hedges, we could witness a sizeable $12-24 billion worth of inflows into the Bitcoin ETF. 

Now, let’s explore the potential impact of the Black Rock Bitcoin ETF’s approval. If Tether’s market cap increases by $24 billion, acting as a proxy for potential ETF inflows, Bitcoin’s price would rise to $42,000, representing a conservative estimate. With a larger influx of $50 billion (1% allocation from RIAs), Bitcoin could potentially rally to $56,000.

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