- Crypto analyst predicts that the Bitcoin price could surge by 66 percent to hit $42k months after a spot Bitcoin ETF is approved in the US.
- His prediction is based on the amount of Bitcoin inflows following the launch of the spot Bitcoin ETF in Canada and Bitcoin futures ETF in the US.
Bitcoin (BTC) currently has a neutral market sentiment after recording a marginal fall in the last 24 hours to trade at $26,614.71. The asset has struggled in the past couple of months due to some external factors. However, a Senior Analyst at K33 Research, Vetle Lunde, has predicted a 66 percent surge for BTC.
According to him, the market is currently undervalued as it underestimates the impact of the U.S. spot Bitcoin Exchange-Traded Fund and the ETH futures-based ETF. Several institutions that previously had their ETF applications rejected have refiled after realizing that the possibility of approval is getting higher. BlackRock, which is among the applicants, is known to have had 575 out of a total of 576 ETF applications approved by the US Securities and Exchange Commission.
Its involvement in the spot ETF application coupled with the recent Grayscale Investments’ court victory makes an approval imminent, but just a matter of time. According to Lunde, the BTC market is currently trading at a pre-BlackRock announcement level.
Competition and simultaneous launches of U.S. ETFs (if approved) will lead to very strong inflows. I expect stronger inflows than both BITO and Purpose managed in their first trading days.
Taking Lessons From World’s First Spot Bitcoin ETF
In 2021, Purpose Investments launched the world’s first-ever spot Bitcoin ETF in Canada. Lunde pointed out that this announcement attracted an inflow of 11,141 BTC into the market. Other ETFs were approved later, driving 58k BTC into the market in the first 4 months.
Considering the fact that the market size in Canada is far smaller than its equivalent in the US, the impact on the Bitcoin price could be massive. Similarly, the ProShares Bitcoin Strategy ETF (BITO) which is the first US Bitcoin futures ETF attracted an inflow of 19,425 BTC in the first ten days. The fact that the spot Bitcoin ETF is found superior to the future-based ETF in terms of direct cost makes it more likely to make a bigger impact.
The analyst also pointed out that Bitcoin investment vehicle flows and BTC direction are directly related.
Bitcoin’s average 30-day return when BTC flows are on an uptrend sits at 8.2%, whereas BTC’s average 30-day return when BTC flows are in a downtrend sits at 2.4%. This tendency is logical; when investment vehicles see growing inflows, bitcoins are absorbed off the market, and net buyers fuel momentum.
More on the BTC Price Prediction
His analysis of market data dating back to 2020 indicates that there is a 30-day return of 23 percent on the average, whenever investment vehicles record a monthly flow of at least 20k BTC.
Based on the BITO launch flows and Purpose BTC’s inflows, Lunde argues that a spot Bitcoin ETF in the US would drive 30k BTC worth of inflows in the first 10 trading days. According to him, the flow could be very strong, driving between 70k to 100k BTC inflows in the first 4 months after launch. In this case, the BTC price could hit $42k. He further clarified that the prediction does not factor in any other event that may directly affect the BTC and the crypto market.
The seriously boring market over the summer and poor momentum of late have crushed the sentiment. Given the very constructive ETF developments, I am still surprised to find my current view rather contrarian. Further, keep in mind that we’re half a year from BTC’s halving and a…— Vetle Lunde (@VetleLunde) September 8, 2023