NYDIG Analyst Report Suggests Bitcoin ETF Could Drive $30 Billion In Investor Inflows

New York Digital Investment Group (NYDIG), a financial services firm with a focus on Bitcoin BTC/USD, has released a report suggesting that the introduction of spot (physical) Bitcoin exchange-traded funds (ETFs) in the US market holds the potential to create a fresh demand for Bitcoin—possibly reaching $30 billion.

According to the comprehensive report, the existing assets under management for Bitcoin in various funds exceed $28 billion. Nonetheless, these current options are burdened by several drawbacks for investors—challenges that a spot ETF could effectively resolve.

The excitement and confidence surrounding the potential approval of the inaugural Bitcoin ETF in the United States have surged following the submission of applications by prominent financial players such as BlackRock and Fidelity. Since the filing of its application by the world’s largest asset manager, BTC value has surged approximately 20%. However, regulatory clearance is still pending.

The report underscores the potential advantages of a spot ETF. These advantages encompass validation from influential entities like BlackRock and the iShares franchise, the familiarity of trading processes through stockbrokers, and the streamlined nature of position reporting, risk assessment, and tax reporting.

The analysis further draws a parallel between existing ETFs backed by gold and investment instruments associated with Bitcoin. By positioning BTC as a digital counterpart to gold, the report highlights that ETFs tied to the precious metal hold a mere 1.6% of the global gold supply, in contrast to central banks holding 17.1%. Conversely, Bitcoin funds command ownership of 4.9% of the total cryptocurrency supply.

——Bank and brokerage bitcoin ownership remains very subdued compared to gold

In comparison to the substantial BTC assets managed in funds, gold ETFs boast investments exceeding $210 billion. NYDIG observes this substantial contrast in demand for the digital and traditional iterations of the asset within these funds.

The company contends, “Given Bitcoin’s roughly 3.6 times higher volatility compared to gold, investors would need approximately 3.6 times less Bitcoin than dollar-denominated gold to achieve an equivalent level of risk exposure. This would still translate to an additional demand of nearly $30 billion for a Bitcoin ETF.”

NYDIG’s perspective highlights the parallels between Bitcoin and gold, making them appealing to investors seeking exposure to diverse assets.

The anticipated introduction of spot Bitcoin ETFs to the US market is expected to stimulate interest among institutional investors, potentially leading to substantial capital injections. This influx of funds could propel the valuation of Bitcoin and other cryptocurrencies upwards, aligning with the aspirations of cryptocurrency enthusiasts.

A similar dynamic applies to Bitcoin. The launch of an ETF is just one element of the larger equation, and various other factors need to align for a substantial price surge in the cryptocurrency. These factors encompass potential adjustments in monetary policy by the US Federal Reserve (FED) and the depreciation of the US dollar.

While a spot Bitcoin ETF can unquestionably stimulate heightened interest and attract fresh investments to the cryptocurrency sphere, it’s important to recognize that its impact alone might not lead to a scenario where one Bitcoin is valued at $100,000, as some might anticipate.

In recent weeks, JPMorgan analysts have offered a cautious projection, suggesting that the approval of physically-backed Bitcoin ETFs is unlikely to be the sole catalyst that revolutionizes the crypto markets.