The BlackRock Bitcoin ETF is one of the most anticipated products in the crypto space, as it could open the door for more institutional and retail investors to access the largest cryptocurrency by market capitalization. The ETF would track the spot price of Bitcoin, rather than the futures contracts, and would use Coinbase as the custodian and pricing data provider.
According to a research report by Matrixport, a digital asset financial services platform, the approval of the BlackRock Bitcoin ETF could have a significant impact on the BTC price, depending on the level of inflows and adoption. The report estimates two scenarios: a conservative one and an optimistic one.
The Conservative Scenario
In the conservative scenario, Matrixport assumes that the BlackRock Bitcoin ETF would attract $10 billion of inflows in the first year, which is equivalent to 10% of the current Bitcoin ETF market size in Canada. The report also assumes that the ETF would have a 0.5% annual expense ratio, and that the spot Bitcoin price would be $30,000 at the time of launch.
Based on these assumptions, Matrixport calculates that the BlackRock Bitcoin ETF would need to buy 333,333 BTC in the first year, which is about 1.7% of the total supply. This would create a buying pressure that would increase the BTC price by 40%, resulting in a conservative estimate of $42,000 per BTC.
The Optimistic Scenario
In the optimistic scenario, Matrixport assumes that the BlackRock Bitcoin ETF would attract $50 billion of inflows in the first year, which is equivalent to 50% of the current Bitcoin ETF market size in Canada. The report also assumes that the ETF would have a 0.25% annual expense ratio, and that the spot Bitcoin price would be $35,000 at the time of launch.
Based on these assumptions, Matrixport calculates that the BlackRock Bitcoin ETF would need to buy 1.43 million BTC in the first year, which is about 7.3% of the total supply. This would create a buying pressure that would increase the BTC price by 60%, resulting in an optimistic estimate of $56,000 per BTC.
Conclusion
The BlackRock Bitcoin ETF could be a game-changer for the crypto industry, as it could attract more investors and increase the demand and price of Bitcoin. However, the approval of the ETF is still uncertain, as the SEC has previously rejected several spot Bitcoin ETF applications due to concerns over volatility and manipulation. Moreover, the ETF would face competition from other products that track Bitcoin futures or stocks. Therefore, investors should be cautious and realistic about their expectations for the BlackRock Bitcoin ETF.
