Spot bitcoin ETFs may bring $50-100 billion of inflows in 2024, says Standard Chartered Bank

The Securities and Exchange Commission is widely believed to be getting ready to approve spot bitcoin exchange-traded funds this week, and those funds could pull in a whopping $50-100 billion worth of inflows this year, according to Standard Chartered Bank.

The bank compared the expected launch of spot bitcoin ETFs with gold ETFs and how those funds revolutionized investor access to the gold market. Specifically, Standard Chartered used the first U.S.-based gold ETF — SPDR Gold Shares (GLD) — as a point of comparison. GLD was introduced in 2004 and is currently the largest physically backed gold ETF in the world.

"When GLD was introduced in November 2004, the total stock of above-ground gold was worth around $2.2 trillion, compared with BTC +4.31% 's current market cap of $0.86 trillion. Adjusting the $88 billion of GLD inflows for relative market caps would suggest $34 billion of inflows to BTC ETFs," Standard Chartered Bank analysts led by Geoffrey Kendrick wrote in a report on Monday.

That figure is the bank's expected flow near the low side. On the "too high" side, it expects $130 billion worth of inflows, and inflows in a rough range of $50-100 billion in 2024 "seems reasonable," the bank said.

Several spot bitcoin ETF applicants themselves also expect billions of dollars to flow into the market. For instance, VanEck  estimates $1 billion of inflows in the first few days and $2.4 billion within a quarter. Galaxy predicts  inflows at $14 billion within the first year. Looking further ahead, Bitwise  anticipates  a market size of around $72 billion within five years.

Bitcoin price could reach $200,000 by end-2025, says Standard Chartered Bank

Standard Chartered Bank sees potential spot bitcoin ETF approvals as a "watershed moment" for normalizing bitcoin participation by institutional investors and also expects a sharp price rise in bitcoin by the end of 2025. It noted that the price of gold rose 4.3 times in the seven to eight years it took for gold ETP holdings to mature after GLD was introduced.

"We expect bitcoin to enjoy price gains of a similar magnitude as a result of U.S. spot ETF approval, but we see these gains materializing over a shorter (one- to two-year) period, given our view that the BTC ETF market will develop more quickly," the bank said. "This is consistent with our end-2024 view of bitcoin at the $100,000 level. If ETF-related inflows materialize as we expect, we think an end-2025 level closer to $200,000 is possible. This assumes that between 437,000 and 1.32 million new bitcoins will be held in spot U.S. ETFs by end-2024. In USD terms, this should be roughly $50-100 billion."

What about spot ether ETFs?

Several firms have also filed for spot ether ETFs, and the bank expects approval for those ETFs in the second quarter of this year. The SEC will view ETH ETFs differently from BTC ones, according to Standard Chartered, as SEC Chair Gary Gensler once said everything other than bitcoin is potentially a security. Notably, however, as ETH was not listed among the 67 coins and tokens the SEC alleged were securities when it sued several exchanges, it is "ultimately likely to allow spot ETH ETFs," the bank said.

The price dynamics of gold versus silver around the introduction of their respective ETFs offer valuable insights regarding expected bitcoin and ether prices, according to the bank.

The silver fund SLV was introduced in April 2006, following the introduction of GLD in November 2004. Gold outperformed post-ETP introduction, likely due to actual inflows, while silver outperformed leading up to its ETP launch, presumably driven by anticipated flows into the relatively less liquid silver market. However, silver later relinquished its relative performance after the ETP introduction.

"Silver ETP flows vary in both directions more significantly than gold, but can also represent a much larger market share of annual flows,” the bank said.