The market is getting ready to receive an influx of new funds from a variety of sources, such as the launch of brand new stablecoins, the tokenization of traditional assets, the tokenization of native crypto infrastructure, and the introduction of cryptocurrency exchange-traded funds (ETFs).
In the context of exchange-traded funds (ETFs), the impact of these investments goes beyond the simple act of generating demand in the spot market. In a report published on Monday, the brokerage firm Bernstein highlighted the fact that the approval of these ETFs by regulatory bodies not only results in an increase in demand, but it also functions as a market signal.
This signal kickstarts a growth cycle, which in turn encourages retail and institutional investors to participate in the market in the hopes of establishing their credibility and legitimacy.
Analysts under the direction of Gautam Chhugani made the following observation: “The likelihood of approval has increased given the keen interest of prominent global asset managers in Bitcoin (BTC) spot ETFs and their efforts to address concerns raised by the U.S. Securities and Exchange Commission (SEC),” the analysts said.
According to Bernstein’s research, the potential market for a spot Bitcoin ETF has the potential to become substantial within the next two to three years, reaching approximately 10% of Bitcoin’s total market capitalization at that point.
The Securities and Exchange Commission (SEC) has recently prolonged its review of Ark 21Shares’ Bitcoin exchange-traded fund (ETF) application. This action is in line with the SEC’s ongoing consideration of applications from well-established players in the financial industry, such as BlackRock (BLK) and Fidelity Investments.
According to the report, cryptocurrency exchange-traded funds (ETFs) should benefit from “effective brand marketing strategies by leading global asset managers” as well as “a strong push for distribution through retail brokers and financial advisors.”
Bernstein goes on to point out that the new capital that will be driving the next cryptocurrency cycle is expected to come from a variety of sources, such as newly introduced stablecoins, the tokenization of traditional assets, the tokenization of native crypto infrastructure, and the impact of ETFs.
In addition, the report mentioned that “on-chain assets have been fluctuating within a $40 billion range this year, while stablecoins in circulation have hovered around the mark of $120 billion.”