In a recent series of tweets, Vetle Lunde, Senior Analyst at K33 Research, took a closer look at the potential consequences of US Bitcoin (BTC) spot ETFs. Lunde’s analysis suggests that the broader market may have greatly underestimated the transformative power of these financial instruments.
Lunde’s statement is rooted in five core principles reasons. He began with a bold proclamation: “The market was wrong – and underestimated the impact of US BTC ETFs (and ETH futures-based ETFs).”
Why The Market Is Wrong With Bitcoin
First, Lunde believes that the current climate is ripe for the approval of US spot ETFs, suggesting that the odds could not be more favorable. As reported by NewsBTC, Bloomberg experts Eric Balchunas and James Seyffart recently raised their chances of approval of the Bitcoin spot ETF after the Grayscale judgment to 75% this year, 95% at the end in 2024.
Second, Lunde pointed out that BTC price has returned to pre-BlackRock announcement levels. The third reason revolves around potential competition and the simultaneous launch of several US spot ETFs. Lunde expects that this, if approved, could lead to strong inflows, possibly exceeding the first trading days of BITO and Katuyoan.
For context, he highlighted that Purpose saw inflows of 11,141 BTC, and after this, the subsequent launch of the ETF in Canada resulted in a massive 58,000 BTC worth of inflows within four just a month. Because of the vastness of the US market compared to Canada, the flow potential is much higher.
The fourth reason presented by Lunde is based on historical data from the past four years. He emphasized a noticeable correlation between strong BTC investment vehicle inflows and appreciation of BTC prices. This relationship becomes even more pronounced during periods of extreme flows, which have historically contributed to significant market increases.
The last important point for Lunde is that on August 17 the market recovered from excessive leverage, as reported by NewsBTC.
By the Numbers
In conclusion, the research firm posits that US BTC spot ETFs will see at least 30,000 BTC worth of inflows in their first 10 days. Within four months, the combined flow of BTC investment vehicles could range between 70,000 to 100,000 BTC, driven by US spot ETFs and growing flows of ETPs in other countries.
Based on these flowing assumptions and data from the past four years, Lunde suggests a potential 66% BTC rally, targeting a price of $42,000. However, he also cautioned that this projection is based on a “naive assumption” and does not account for other market-moving events.
At press time, BTC was trading at $25,865.
Featured image from iStock, chart from TradingView.com