In a recent analysis, CoinShares’ Head of Research, James Butterfill, explores the potential impact of a Bitcoin Spot ETF in the US on BTC price. Using fund flow data, Butterfill said on the X platform that Bitcoin may hit $81,000, sparking speculations among the crypto market enthusiasts.
The speculations over Bitcoin Spot ETF approval have been witnessed in the market, triggering a rally in the broader digital asset space. Several market pundits anticipate that the approval of the same would inject billions of dollars into the BTC market. So, let’s take a look at how much inflow could trigger a significant rally in the BTC price in the coming days.
James Butterfill’s Analysis Using Fund Flows Data
In a recent blog, Coinshares’ James Butterfill explores the intricate relationship between Bitcoin prices and Exchange-Traded Products (ETP) fund flows. Notably, drawing from historical data, Butterfill highlights the coexistence of rising prices and increased inflows, suggesting a momentum-driven approach among ETP investors. In addition, the analysis spots times of market struggle, affecting ETP trading based on sentiment.
Meanwhile, utilizing a quantitative approach, Butterfill introduces a predictive model correlating 45-day price changes and weekly flows as a percentage of AuM. The model suggests a potential surge to $141,000 per Bitcoin with an estimated $14.4 billion in inflows.
However, the analyst acknowledges the difficulty in precisely gauging future inflows, presenting a matrix of varied inflow scenarios and their potential impact on Bitcoin prices. Meanwhile, as the prospect of a Bitcoin Spot ETF in the U.S. looms, Butterfill said on the X platform that a $2.5 billion inflow could drive BTC prices to $54,000, while a $6.2 billion inflow might push prices up to $81,000 while using fund flows data.
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Bitcoin Price & Performance
The Bitcoin price was down 1.21% over the last 24 hours and traded at $36,467.12 during writing on November 17. The decline in the recent BTC price comes amid sell-off in the broader market, following BlackRock’s official filing for Spot Ethereum ETF with the SEC on Thursday.
Meanwhile, the trading volume of the largest crypto by market cap also slumped 12.68% to $25.07 billion at the same time. However, the Bitcoin price has added over 29% over the last seven days, reflecting the bullish sentiment in the market towards the risk-bet assets.
Notably, recognizing the potential diversification benefits and enhanced sharpe ratios a Bitcoin ETF could offer, Butterfill notes the slow-burning challenges of regulatory approval and corporate acceptance. The perceived complexity of Bitcoin could result in a gradual process of corporations and funds building knowledge and confidence before entering the market.
Considering that, Butterfill anticipates a significant wall of demand once a spot-based ETF is launched but also emphasizes the gradual nature of corporate and fund involvement. The potential for a surge in Bitcoin prices remains contingent on overcoming regulatory hurdles and dispelling the perceived complexity surrounding Bitcoin as an investment asset.
Also Read: International Securities Regulator IOSCO Finalized Policies For Crypto Regulation
