Galaxy Research, a division of crypto investment firm Galaxy Digital, has released a report predicting that Bitcoin ETF inflows could reach $14 billion in the first year after launch, rising to $27 billion in the second year and $39 billion in the third year.
The report, titled “Sizing the Market for a Bitcoin ETF,” estimates that the total addressable market for a Bitcoin ETF in the United States is ~$14 trillion in Year 1 after launch, ~$26 trillion in Year 2, and $39 trillion in Year 3.
The report’s authors base their estimates on the following assumptions:
- Bitcoin is adopted by 10% of total available assets in each wealth channel with an average allocation of 1%.
- ETFs generally come with lower fees compared to traditional investment options, offering cost-effective exposure to Bitcoin.
- A Bitcoin spot ETF offers a hassle-free way to access Bitcoin, catering to both retail and institutional investors.
- ETFs typically adhere to rigorous regulatory standards, ensuring robust compliance requirements regarding custody setups, surveillance, and bankruptcy protection.
Research report is bullish on the long-term prospects for Bitcoin ETF inflows
The report also notes that fund inflows into Bitcoin ETFs will have a more substantial impact on the Bitcoin market than gold inflows into gold ETFs, due to Bitcoin’s relatively smaller market capitalization and less supply held in investment vehicles.
Overall, the Galaxy Research report is bullish on the long-term prospects for Bitcoin ETF inflows. The report’s authors believe that the launch of a Bitcoin spot ETF would be a major catalyst for institutional adoption of Bitcoin and would drive significant inflows into the asset class.
Implications for the Bitcoin market
If Galaxy Research’s predictions are accurate, the launch of a Bitcoin spot ETF could have a significant impact on the Bitcoin market. A large influx of institutional investors could drive up the price of Bitcoin and increase its liquidity. This could also lead to a more mature and sophisticated Bitcoin market, with more sophisticated financial products and services being offered.