Galaxy Digital, a cryptocurrency firm founded by billionaire Mike Novogratz, has published a report that predicts the price of Bitcoin will reach near $60,000 within a year after the approval of a spot Bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC)1.
A spot Bitcoin ETF is a type of investment product that tracks the price of Bitcoin directly, rather than through derivatives such as futures or options. Galaxy Digital argues that a spot Bitcoin ETF would be the most impactful catalyst for the growth and adoption of Bitcoin, as it would provide a simple and efficient way for investors to access the digital asset.
According to Galaxy Digital, a spot Bitcoin ETF would increase the demand for Bitcoin by attracting new investors, especially institutional ones, who are looking for exposure to the crypto market. The report estimates that a spot Bitcoin ETF could bring in $25 billion of net inflows into Bitcoin in the first year, equivalent to 5% of the current market capitalization.
The report also analyzes the impact of a spot Bitcoin ETF on the supply and liquidity of Bitcoin, as well as the regulatory and legal implications. The report concludes that a spot Bitcoin ETF would be beneficial for the Bitcoin ecosystem, as it would improve price discovery, reduce volatility, enhance security, and foster innovation.
Galaxy Digital is not the only firm that is optimistic about the prospects of a spot Bitcoin ETF. Several other companies have filed applications with the SEC to launch such a product, including Fidelity, VanEck, Valkyrie, and NYDIG. However, the SEC has not yet approved any of these proposals, and has repeatedly delayed its decisions on them.
The SEC has expressed concerns about the potential risks and challenges associated with a spot Bitcoin ETF, such as market manipulation, fraud, custody, valuation, and investor protection. The SEC has also indicated that it prefers a futures-based Bitcoin ETF over a spot one, as it believes that futures markets are more regulated and transparent than spot markets.
The SEC has already approved several futures-based Bitcoin ETFs this month, which have seen strong demand from investors. However, Galaxy Digital and other proponents of a spot Bitcoin ETF argue that these products are inferior to a spot one, as they incur higher fees, tracking errors, and roll costs.
Galaxy Digital hopes that its report will help persuade the SEC to approve a spot Bitcoin ETF in the near future, as it believes that this would be a game-changer for the crypto industry and the broader financial system. The report states that “a spot Bitcoin ETF would be one of the most significant events in Bitcoin’s history.”