Hong Kong’s Bitcoin ETF approval may bring modest initial inflows, but longer-term market dynamics could drive substantial capital deployment.
Willy Woo’s projections hint at Bitcoin’s potential to reach unprecedented highs, reflecting the transformative impact of institutional investments.
The Bitcoin MVRV Momentum indicator suggests a buying opportunity post-market correction despite short-term price fluctuations.
Hong Kong’s approval of trading spot- Bitcoin and Ethereum-ETFs has prompted major waves of optimism in the cryptocurrency investors and traders worldwide. As per Santiment, an analytic firm, the immediate market response was not as expected, with Bitcoin (BTC) experiencing a 4.5% decline post-announcement. Despite this setback, analysts predict a rebound once the initial FOMO (fear of missing out) settles.
According to Bloomberg ETF analyst Eric Balchunas, the anticipated capital inflows into Hong Kong’s spot Bitcoin ETFs may fall short of expectations, estimated at around US$500 million. This relatively modest figure is attributed to several factors, including the nascent size of Hong Kong’s ETF market compared to the United States and concerns over transaction fees and the caliber of ETF issuers.
Considering the market correction that took place, trading at the level of $62,699.91, the Bitcoin MVRV (Market Value to Realized Value) Momentum indicator is now more than 10% below the 90-day average mark, which may be a signal to buy. Despite potential further declines, this metric suggests that now could be an opportune moment for investors to consider entering the market.
Renowned market analyst Willy Woo has made bold projections about Bitcoin’s price trajectory in response to Hong Kong’s ETF approval. Woo forecasts a potential surge to $650,000 per Bitcoin at the peak of the bull market, driven by increased capital deployment from ETF investors. These estimates are based on historical patterns observed post-ETF adoption in the United States, where significant growth was witnessed within a short timeframe.
Woo’s calculations factor in the substantial capital managed by asset managers globally, estimated at $100 trillion, with a typical 2% allocation recommendation into Bitcoin. This could translate into a $2 trillion allocation into BTC once fully deployed, significantly impacting its market capitalization.
However, Woo cautions that these projections are not immediate and require time for capital deployment to unfold fully. He emphasizes that Bitcoin’s market capitalization could surpass that of gold once this capital is fully mobilized, underlining the profound potential impact of institutional investments on the cryptocurrency market.
These estimations draw from the MVRV ratio, which historically reflects different market phases. During bull market peaks, the MVRV ratio typically reaches around 5x, suggesting a potential market capitalization of $12.8 trillion and a price target of $650,000 per Bitcoin. Conversely, bear market bottoms see a lower MVRV ratio of approximately 0.7x, translating to a market capitalization of $1.8 trillion and a price target of $91,000 per Bitcoin.
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Hong Kong’s approval of trading spot- Bitcoin and Ethereum-ETFs has prompted major waves of optimism in the cryptocurrency investors and traders worldwide. As per Santiment,
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