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Bitcoin, the world’s flagship cryptocurrency, could experience a substantial influx of demand worth $30 billion if spot-based exchange-traded funds (ETFs) come into play, predicts NYDIG, a leading crypto trading firm. Drawing inspiration from the inaugural listing of the Gold ETF, this prediction also acknowledges some potential uncertainties.
In the midst of the digital currency market’s feverish anticipation for spot-ETFs, financial heavyweights like BlackRock and Fidelity have played significant roles. NYDIG’s research report brings attention to the strong brand identities of these firms and their iShares franchise, which are familiar to a vast number of investors. The trading firm states that these factors, coupled with the simplicity and familiarity of transaction methods through securities brokers, could drive the benefits of a Bitcoin spot ETF.
The crypto trading firm has already undertaken modeling that indicates a total of $28.8 billion in Bitcoin assets currently managed, with $27.6 billion represented by spot-like products.
Bitcoin, frequently tagged as ‘digital gold‘, draws inevitable comparisons with gold ETFs, especially those listed in the early 2000s. NYDIG’s report highlights the relatively minor share of gold ETFs in the global gold supply, a mere 1.6%, compared to 17.1% held by central banks. Contrastingly, Bitcoin funds represent 4.9% of the total Bitcoin supply.
Diving deeper into the comparison between Bitcoin and its traditional counterpart, gold, the demand for these assets within funds is significantly disproportionate. Gold funds attract a whopping $210 billion in investments, whereas Bitcoin funds hold a far less $28.8 billion.
Even though Bitcoin’s volatility is about 3.6 times that of gold, investors would require less Bitcoin than gold, on a dollar-to-dollar basis, to obtain an equivalent level of risk exposure. This reality, NYDIG maintains, could potentially generate a staggering $30B in additional demand for a Bitcoin ETF.