NYDIG Predicts $30 Billion Inflow In BTC With Spot Bitcoin ETF Approval

BlackRock’s filing of the spot Bitcoin ETF last month has sparked huge interest in the Bitcoin investment product, which is yet to hit the market subject to SEC approval. In its latest research report, NYDIG explained how the arrival of a spot Bitcoin ETF could be a game changer for Bitcoin investors.

While the spot Bitcoin ETF exists in other parts of the world, the investment product has yet to hit the US market. As per NYDIG estimates, a total of $28.8 billion of combined AUM already exists in Bitcoin investment products across the world. Of these, $27.6 billion have been invested in spot products.

NYDIG explains that the positive reasons for a spot ETF are that it would solve some issues with current investment options in Bitcoin. An ETF would have better protections for investors and function as a reliable choice because of the BlackRock and iShares brand.

It would also be easier to buy and sell through brokers and report positions, measure risks, and do taxes. Compared to other options like private funds or trusts, a spot ETF would likely have better liquidity, less tracking error, and possibly lower costs. However, there’s no decision over the fees charged for trading spot Bitcoin ETFs.

Bitcoin and Gold Analogy, $30 Billion Inflows Likely After Spot Bitcoin ETF

NYDIG also shares an interesting analogy between Bitcoin and Gold, the two asset classes often compared with each other. Gold ETFs across the world account for over $210 billion in AUM. Of these, nearly half of that AUM, i.e. $107.3 billion is in North America.

Bitcoin is not held by central banks (except in El Salvador) or used in products like gold. However, a larger portion of Bitcoin’s supply (4.9%) is held in various funds compared to gold (1.6%). When looking at private holdings, the ratio is more favorable for Bitcoin compared to gold, which includes ETFs and bars and coins. Explaining further, NYDIG states that another $30 billion in inflows into Bitcoin can’t be ruled out with the arrival of spot Bitcoin ETF. It added:

The numbers are striking on an absolute dollar basis – over $210B invested in gold funds, while only $28.8B is invested in Bitcoin funds. Bitcoin is about 3.6x more volatile than gold, meaning that on a volatility equivalent basis, investors would require 3.6x less bitcoin than gold on a dollar basis to get as much risk exposure. Still, that would result in nearly $30B of incremental demand for a Bitcoin ETF.

Although NYDIG is bullish over the arrival of spot Bitcoin ETF, other market players don’t have the same view. Earlier this month, banking giant JPMorgan said that spot Bitcoin ETF would likely not have much impact on the market. The banking giant added that spot Bitcoin ETFs haven’t seen much success in overseas markets. Thus, there’s no reason for them to succeed in the US.