In a recent deep dive, Vetle Lunde, a Senior Analyst at K33 Research, explored the potential impact of US Bitcoin (BTC) spot ETFs on the broader market, suggesting that many might be underestimating the transformative power of these financial tools.
Why the Market Might Be Underestimating Bitcoin Spot ETFs
Lunde outlined five core reasons why the market might be undervaluing the influence of US BTC and ETH futures-based ETFs.
Firstly, he emphasized that the current environment is highly conducive for the approval of US spot ETFs, with the odds being more favorable than ever. Bloomberg experts Eric Balchunas and James Seyffart have even increased their Bitcoin spot ETF approval odds to 75% for this year and 95% by the end of 2024, following the recent Grayscale judgment.
Secondly, Lunde noted that the BTC price has reverted to levels seen before the BlackRock announcement. He also highlighted the potential competition arising from the simultaneous launch of multiple US spot ETFs, which could potentially lead to substantial inflows, surpassing the initial trading days of BITO and Purpose.
To provide a context, Lunde mentioned that the ETF launches in Canada following Purpose led to an impressive inflow of 58,000 BTC within just four months, a figure that could be dwarfed given the larger US market.
Historical Data and Market Dynamics
Drawing from the data of the past four years, Lunde underscored a significant correlation between strong BTC investment vehicle inflows and rising BTC prices, a trend that becomes even more evident during periods of extreme inflows which have historically led to considerable market uplifts.
Lunde also pointed out that the market shed excess leverage on August 17, creating a more stable environment for growth.
Predictions and Forecasts
Concluding his analysis, Lunde posited that US BTC spot ETFs might witness inflows of at least 30,000 BTC in the initial 10 days. Over a period of four months, the cumulative inflows into BTC investment vehicles could oscillate between 70,000 to 100,000 BTC, spurred by US spot ETFs and increasing inflows to ETPs globally.
Based on these assumptions and historical data, Lunde projected a potential 66% BTC rally, targeting a price point of $42,000.
