Bitcoin Could Hit $42K if BlackRock Bitcoin ETF is Approved: Matrixport

Crypto financial services platform Matrixport has predicted a major Bitcoin (BTC) rally driven by favorable macroeconomic conditions and lower US inflation. 

In a recent report titled "Matrix onTarget," the company noted that one notable development is the remarkable performance of Grayscale Investments' Bitcoin Trust (GBTC) shares, which have surged by an impressive 167% year-to-date, outperforming Bitcoin's own 71% growth. 

At the beginning of the year, GBTC's net-asset-value (NAV) discount stood at -45% and slightly narrowed to -43%. 

However, the real game-changer came with BlackRock's announcement of its Bitcoin ETF application on June 15, 2023.

In an earlier report, Matrixport revealed that the US registered investor advisor (RIA) community consists of approximately 15,000 advisors overseeing around $5 trillion. 

"This group holds immense potential, and even a modest 1% allocation recommendation for Bitcoin would usher in around $50 billion in inflows," the company wrote. 

Comparing this to the precious metals ETFs, which have a market cap of around $120 billion, assuming that 10-20% of precious metal ETF investors consider diversifying into a Bitcoin ETF as a hedge against monetary debasement and inflation, Matrixport said we could witness an inflow of $12 to $24 billion into the Bitcoin ETF.

"If Tether’s market cap increases by $24 billion, acting as a proxy for potential ETF inflows, Bitcoin’s price would rise to $42,000, representing a conservative estimate."

Moreover, with a larger influx of $50 billion resulting from a 1% allocation recommendation by RIAs, Bitcoin has the potential to rally up to $56,000, the firm added. 

Experts Await Launch of Spot Bitcoin ETF

Matrixport's projections come amid growing optimism toward the launch of a spot Bitcoin ETF. 

Back in May, a US court ruled in favor of Ripple in the ongoing lawsuit brought by the SEC, claiming that selling XRP on exchanges in itself does not constitute an investment contract. 

The ruling, issued by the District Court for the Southern District of New York, stated that the “offer and sale of XRP on digital asset exchanges did not amount to offers and sales of investment contracts.”

Citing the victory, JPMorgan analysts led by Nikolaos Panigirtzoglou said that the SEC will likely be forced to approve multiple spot BTC ETF applications.

They wrote that Grayscale’s win implies that the SEC would have to retroactively withdraw its previous approval of futures-based Bitcoin ETFs in order to defend its denial of Grayscale’s proposal of converting its Bitcoin trust into an ETF. 

However, such a move would be “very disruptive and embarrassing for the SEC” and appears unlikely, the analysts said, adding:

"It looks more likely that the SEC would be forced to approve the spot bitcoin ETF applications that are still pending from several asset managers, including that from Grayscale."