In a recent analysis, wealth management powerhouse Bernstein asserts that if a spot Bitcoin ETF application should gain approval from the Securities and Exchange Commission (SEC), it might usher in a new period of expansion for the crypto-market. The firm postulates that a spot BTC ETF could bolster the whole digital asset infrastructure by stimulating demand not only in Bitcoin itself but also impacting the stablecoin market.
As the report outlines, Bernstein predicts a digital finance revival, with increased liquidity forming around various assets. Fresh capital inflows could activate this resurgence, expanding from existing players in the cryptocurrency world. DeFi or decentralized finance should benefit from this upswing, as should the stablecoin ecosystem – an understandable increase given the pivotal role stablecoins play as a gateway to broader cryptocurrency investments.
The report also envisions an investment surge around crypto infrastructure and the continuing tokenization of traditional assets across a multitude of chains. According to Gautam Chhugani, the lead analyst on the study, a potential approval could manifest as a “flywheel” motion, gaining momentum from both casual and more significant investors.
This potential thumbs-up from the SEC could be a symbolic lifeline in the current US regulatory landscape, painting a wider brush of legitimacy on the concept of cryptocurrency. Earlier this month, Bernstein delivered a study that foresees the stablecoin market cap swelling by a staggering 2,145% over five years. This forecast takes into account the potential impact of PayPal’s upcoming stablecoin along with other sector advancements.
As the Bitcoin spot ETF narrative stirs hope with filed applications from industry giants like BlackRock, Bitcoin prices have soared, with investors rejoicing in the market recovery from the bearish tinge of 2022. The SEC’s successive deferrals of Ark21 Shares’ applications, among others, breed some skepticism. However, industry insiders remain hopeful about an eventual approval, expressing confidence in the gateway this would pry open for broader institutional investments in digital assets.
Shifting gears to PayPal, Bernstein opines that the soon-to-be-launched PYUSD stablecoin could kickstart a fresh era in traditional payment drives within digital assets, offering their large customer base access to novel utilities. However, while these projections sparkle with promise, the firm does note that the current on-chain asset situation remains sideways, despite a minor increase from last year. This reminder suggests that while the future might be glittering with promise, we need to keep a foot rooted in the present reality.