Bitcoin will become a $900 billion asset, and the total crypto market will grow by $1 trillion, should the bitcoin spot exchange-traded funds (ETFs) be approved, data analytics firm CryptoQuant wrote in a recent report.

The first wave of institutional adoption in 2020-2021 came from institutions adding bitcoin to their balance sheets, while the next wave could be financial institutions providing bitcoin access to their clients through spot ETFs, CryptoQuant argued in the report.

The hypothetical inflow from spot ETFs would be significantly larger than the money that entered the Grayscale Bitcoin Trust (GBTC) in the last bull market cycle. GBTC is the largest digital assets fund in the world, currently with $16.7 billion in assets under management.

Digital Currency Group is the parent company of Grayscale and CoinDesk.

CryptoQuant says that if the issuers that have applied to list bitcoin ETFs put 1% of their Assets Under Management (AUM) to these ETFs, approximately $155 billion could enter the bitcoin market. This represents almost a third of bitcoin's current market capitalization. Should this scenario occur, it would hypothetically push bitcoin's price to between $50,000 and $73,000.

Historically, during previous bull markets, bitcoin's market capitalization has grown 3-5 times more than its realized capitalization. This suggests that for every $1 of fresh money entering the bitcoin market, the market capitalization could increase by $3-$5, CryptoQuant added.

Bitcoin recently momentarily jumped to $30,000 after Cointelegraph published a false report about a spot bitcoin ETF being approved. According to some observers, the frenzied bullish price action would keep bears at bay for some time.

"Nobody will dare to short BTC now for the foreseeable future. Even if this Cointelegraph news was false, BTC can still grind higher in anticipation of the approval," Markus Thielen, head of research and strategy at Matrixport, said in a Telegram broadcast.

The bullish sentiment is also evident from the continued narrowing of the GBTC discount to lowest in nearly two years.

The crypto market capitalisation first crossed the $1 trillion mark in January 2021. At press time, the total market cap stood at $1.13 trillion, with bitcoin accounting for over 50% of the tally.