Bernstein predicts that spot ETFs could capture 10% of the Bitcoin market if given the green light

According to Bloomberg, a recent research paper by Sanford C. Bernstein has shed light on the potential impact of exchange-traded funds (ETFs) on bitcoin market dynamics.

Possible increase in Bitcoin market value

Research by Sanford C. Bernstein suggests that ETFs could account for about 10% of Bitcoin’s market value within the next three years if the US greenlights a fund that invests directly in spot Bitcoin.

Such a shift could increase Bitcoin’s presence in traditional financial portfolios and potentially encourage greater institutional adoption.

According to Bloomberg, Gautam Chhugani, an analyst at Bernstein, highlighted the rising likelihood of a spot Bitcoin ETF in the report.

In a separate report, the same analyst recently revealed that the SEC believes a bitcoin spot ETF could be “unreliable” because crypto exchanges (like Coinbase) are not under its oversight, raising concerns about possible price manipulation and unreliability leads.

As speculation continues about the SEC’s approval of a spot bitcoin ETF, wWith the Grayscale Bitcoin Trust currently holding about 4% of all bitcoin, a direct investment, according to Bloomberg, the ETF could more than double that number and potentially support the growth of the crypto investment landscape.

The “growth flywheel” effect

Once regulatory approval is obtained, Bernstein expects a “growth flywheel” effect, driven by inflows from retail and other institutional investors. Such a cascading effect would be reminiscent of other financial markets, where the launch of new financial products spurred new investments and waves of liquidity.

In particular, tTo understand the importance of this fact, one need only consider the growth trajectory of the broader ETF market. Since their inception, ETFs have grown exponentially, with assets under management soaring across multiple sectors and asset classes.

Launching a spot bitcoin ETF would mean bringing a highly liquid, decentralized, and increasingly accepted asset into this mix, further boosting bitcoin’s place in the financial ecosystem.

Meanwhile, bitcoin’s price is struggling to break through $30,000 after slipping below this price range last week. As of this writing, the asset is trading at $29,623, up slightly by 0.5% over the past 24 hours.

Bitcoin (BTC) price is moving sideways on the 4-hour chart. Source: BTC/USD on TradingView.com

In addition to the difficult price, BTC’s market cap has increased by more than $10 billion in the past week alone. Asset market cap has risen to $573 billion now from a peak of $560 billion earlier last week.

The trading volume of the top cryptocurrency also closely followed the rising market cap, noting a significant increase compared to last week’s daily trading volume. Bitcoin 24-hour trading volume is currently at $11.3 billion compared to a lower volume of $8.7 billion last Monday.

Featured image from iStock, chart by TradingView

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