What is the likely pace of the next crypto bull market driven by Bitcoin ETFs?

Bitcoin, the largest cryptocurrency by market value, has developed rapidly recently, mainly due to the expected realization of Bitcoin spot ETFs that are about to be approved in the United States.If you want to huddle together for warmth, or if you have any doubts, Guan Zhu, Wei Xing, and Gong Chong: You want soft rice and hard food

Bitcoin, the largest cryptocurrency by market value, has developed rapidly recently, mainly due to the expected realization of Bitcoin spot ETFs that are about to be approved in the United States.If you want to huddle together for warmth, or if you have any doubts, Guan Zhu, Wei Xing, and Gong Chong: You want soft rice and hard food.

The SEC's rhetoric of rejecting ETFs is decreasing, the decision time is being postponed time and time again, and the SEC has given up appealing against the Grayscale ruling... All kinds of signs indicate that the time for the passage of spot Bitcoin ETFs seems to be approaching. JPMorgan Chase stated in a recent report that,The SEC may soon approve multiple spot Bitcoin ETF applications, with approval most likely before January 10, 2024.

The approval of spot Bitcoin ETFs in the United States is a major milestone event in the entire encryption industry. Bitcoin spot ETFs will greatly improve the convenience and compliance of Bitcoin exposure, and are expected to bring a large amount of incremental funds to the encryption market, which will greatly benefit the long-term development of the entire industry.

Highly sensitive encryption market

In the past, the BTC market was mainly influenced by data such as US stocks, interest rate hikes, and employment rates, butIn recent months, it has been mostly influenced by ETF expectations.Since BlackRock submitted the Bitcoin spot ETF application form in June, every subsequent news about the passing of Bitcoin spot ETFs has been clearly conveyed to the secondary trading market of Bitcoin, highlighting the high sensitivity of the cryptocurrency market to institutional actions. Despite some positive news being confirmed as false, Bitcoin's trading activity remains highly active.

The Development Course and Enlightenment of Gold ETFs

Bitcoin is known as' digital gold ', and the connection between gold and Bitcoin as a means of storing value is also evident. Therefore, studying the passage history and historical market trends of gold ETFs is of great significance for predicting the future market of Bitcoin ETFs. The key time points and price trends before and after the passage of gold ETFs are as follows:

• In March 2003, the world's first gold ETF, called PhysicalGold, was listed in Sydney, Australia. Since then, gold has seen a significant increase and continued to trade until ETFs in the United States began trading.
• In October 2004, the SEC approved the first gold ETFStreetTracksGoldTrust (GLD) in the United States; The gold price continued to sprint slightly after approval.
• In November 2004, the US gold ETFGLD was officially listed and traded on the New York Stock Exchange (NYSE). In the two months after GLD began trading, the market fell by about 9%, briefly falling below the price at which ETFs were passed. After nearly 8 months of consolidation, gold began to enter a high-speed upward cycle.

The adoption of gold ETFs allowed more traders to invest through ETFs, without the need to keep metals and custody in banks. In the following years, gold ETF products sparked a global subscription boom and became a mainstream gold investment tool, attracting a large amount of funds to enter the market. The market generally believes that,The adoption of gold ETFs directly propelled the subsequent 10-year bull market in gold. Of course, on the other hand, the strong performance of gold also needs to be attributed to the relatively stable economic environment and monetary easing policies.

Drawing inspiration from the historical process of gold ETFs, we can make some preliminary predictions on the market trends before and after the approval of special currency ETFs:

• Stage 1: Before the approval of the US Bitcoin spot ETF, there will be sustained market expectations that can be seen as positive
• Stage 2: After the official approval of Bitcoin spot ETFs in the United States, there will still be a small sprint in the market
• Stage 3: Shortly after the listing and trading of Bitcoin spot ETFs in the United States, there may be a significant decline after peaking, or even falling below the pre ETF price, and going through a consolidation cycle to absorb more funds before accelerating the rise.
• Stage 4: In the long run, the listing of Bitcoin spot ETFs in the United States will open the door for traditional funds to enter, becoming an important catalyst for driving the Bitcoin bull market.

Possible start time of the next bull market

From the recent market trend, it can be seen that the market has already digested some of the positive expectations. Based on the historical trend of gold ETFs, the halving time and market performance of Bitcoin, and the macroeconomic policy effects of the Federal Reserve, we have made a rough prediction of the approval time of Bitcoin spot ETFs and the start time of the crypto bull market:

January 2024The US SEC will approve the application for Bitcoin spot ETFs, and at the same time, the Federal Reserve is expected to stop raising interest rates or the market is no longer expected to raise interest rates. These will drive Bitcoin to undergo a round of high testing in January. Prior to this, there may be a period of sustained rise in November 2023 due to positive expectations being fulfilled, and a period of volatility or correction in December due to the possibility of holidays for many Wall Street institutions, hedge funds, and market makers during the Christmas season.

April 2024Bitcoin spot ETFs have officially started trading on the market, and the countdown to Bitcoin has been halved, which helps to absorb a large amount of funds.

July 2024The Bitcoin bull market has officially started. After experiencing a market adjustment after halving and increasing expectations for loose monetary policy, Bitcoin will have a lot of momentum to sprint.

September 2024The Federal Reserve has entered a rate cutting cycle and implemented monetary easing policies.

We expect the start of the bull market to be around July next year, rather than when US spot ETFs officially take effect. The main consideration is that in the 2-3 months after Bitcoin is halved, the market often experiences a wave of adjustment rather than immediately initiating an upward trend; In addition, relying solely on the existing funds in the currency circle cannot support the long-term independent market. The approval of Bitcoin ETFs, which is a heavyweight benefit, requires a certain improvement in the economic situation to bring greater market stimulus and attract more external funds into the market.The market generally expects the Federal Reserve to enter a rate cutting cycle in September next year, and it is reasonable for the market to begin fulfilling the expected rate cuts around July.

Potential demand and long-term trends of BTCETF

With the continuous clarification of Bitcoin's listing process on ETFs and the increasing participation of institutions, its role as a powerful financial fortress in the global landscape has become increasingly evident. With Bitcoin nearing its next halving in 2024, its annual inflation rate will be lower than gold, making it one of the rarest value assets. Because the total amount of BTC is constant and halves every 4 years, it has a high degree of scarcity and reliable storage value,

It is precisely due to the potential strong demand that other global and international mainstream markets are expected to follow the example of the United States in the short term, approving and providing similar Bitcoin or Ethereum spot ETF products to a wider range of investors. Various traditional investment or wealth management institutions will inevitably increase their exposure to Bitcoin in their investment strategies (such as sovereign, mutual, closed-end funds, and private equity funds).

It is expected that the potential new inflow of Bitcoin investment products will be between $125 billion and $450 billion for a long period of time, which is a capital scale of hundreds of billions that cannot be ignored.If we look at the overall asset size of gold at a macro level, a trillion level crypto financial market is about to arrive.