Bernstein: Spot Bitcoin ETF Approval Would Spark Fresh Liquidity and New Cycle

cryptonews.com:

Wealth management firm Bernstein suggests a fresh growth phase for the market if a spot Bitcoin (BTC) ETF application gets approved by the Securities and Exchange Commission (SEC). 

In a new report, the firm noted that a spot BTC ETF would add value to the entire digital asset ecosystem by creating demand in the spot market including the stablecoin market.

The firm argues that fresh capital would trickle into the market, sparking renewed liquidity around several assets and creating a resurgence in DeFi volumes.

Aside from liquidity for DeFi, the stablecoin ecosystem stands to gain as most investors would use these assets as an entrant to wider cryptocurrencies. 

Other points highlighted by the report include the boom of investments around crypto infrastructure and the tokenization of traditional assets across several chains. 

“With the interest of leading global asset managers in bitcoin (BTC) spot ETFs and potential mechanisms to address the U.S. Securities and Exchange Commission (SEC) objections, the probability of approval has risen.” 

Analysts led by Gautam Chhugani stated that a potential approval would become a “flywheel” for both retail and larger institutions in the wake of recent regulatory turmoil in the United States as it would create a wide notion of legitimacy. 

This month, Bernstein released a study that projects the stablecoin market cap to grow by 2,145% to nearly $3 trillion in the next five years as PayPal’s stablecoin and other developments await the sector. 

The firm also projects a spot BTC ETF to grow exponentially, tapping 10% of Bitcoin’s market cap in a couple of years.

Since the filing of a spot BTC ETF application by BlackRock in June, several Bitcoin bulls have backed an approval by the SEC