By Suzanne McGee

(Reuters) - Bitcoin, the original crypto rebel, is racing into the heart of the financial establishment with an exchange-traded fund that tracks its price. But will it strike gold?

The world's biggest cryptocurrency has leapt 28% in October, with investors betting U.S. regulators will give the green light for a spot bitcoin ETF and thereby unleash a new wave of demand.

How much cash could such a fund reel in, though?

Well, it's hard to say, judging by the wide assortment of estimates from market players, ranging from $3 billion on its first day to $55 billion over five years.

"The analogy that I'm looking at is to gold," said Dave Mazza, chief strategy officer at ETF provider Roundhill Investments, adding that the gold market had been transformed by the approval of spot ETFs.

He said he expected the first spot bitcoin ETFs on the scene to see a "wave of buying," echoing the launch of the first ever gold ETF in 2006 in the U.S. or the bitcoin futures ETF in 2021.

Mainstream investment giants such as BlackRock and Fidelity, as well as crypto-focused firms like Grayscale, have filed applications for spot bitcoin ETFs. The U.S. Securities and Exchange Commission will be considering eight to 10 filings for new spot bitcoin products, its chair said on Thursday, without giving details of timing of decisions.

Ranged against the ETF optimists are those traditional investors long wary of crypto who say they won't be won over by new investment vehicles.

"Not a penny of my clients' money will find its way into these misbegotten so-called investments," said George Gagliardi, an investment advisor with Coromandel Wealth Management in Lexington, Massachusetts, who believes cryptocurrencies "have no underlying intrinsic value."

The prospect of an ETF that offers investors direct exposure to bitcoin has nonetheless buoyed the price of the cryptocurrency, which hit $35,198 last week, its highest level since May 2022.

The metrics investors and analysts use to come up with estimates for demand for an ETF, from the size of the gold ETF market to demand for existing products, vary almost as much as their conclusions. Bitcoin markets are also opaque, with price moves driven mostly by investor sentiment.

U.S. crypto firm NYDIG estimates demand for a spot bitcoin ETF at around $30 billion. Their calculation compares the sizes of the gold and bitcoin ETFs - $210 billion versus $28.8 billion, respectively - and adjusts them for their relative volatility.

"It's rare to see a brand-new asset class arrive on the ETF market," said Todd Sohn, ETF strategist at Strategas Securities. "That makes it tough to figure out exactly how much demand is going to materialize."

Existing bitcoin ETFs, tied to the price of futures, don't track price movements precisely, and the cost of rolling over futures contracts can eat into returns, leading many investors to see them as a less desirable vehicle.

Steven McClurg, investment chief at Valkyrie Funds, which has applied for a spot bitcoin ETF, believes one starting point in gauging demand is the size of the Grayscale Bitcoin Trust (GBTC), an open-ended private trust that owns bitcoin directly.

"If you look at the current market capitalization of GBTC - $3.2 billion – that's probably day-one demand" for a spot bitcoin product, he said.

HALF OF FUNDS 'GONE IN TWO YEARS'

Some advocates say that financial advisers, pension funds and other money managers - a pool of capital estimated to total around $46.5 trillion by Boston Consulting Group - could be a significant source of demand for a spot bitcoin ETF.

"If BlackRock reaches the market then some percentage of the wire houses and financial advisers will add their fund to platforms," said Matthew Sigel, head of digital assets research at VanEck, which has a spot bitcoin ETF awaiting SEC approval.

BlackRock declined to comment on its pending spot bitcoin ETF, other than to confirm that it is still awaiting final SEC approval.

Matthew Hougan, CEO of crypto firm Bitwise Investments, said in an industry panel earlier this month that he expects spot bitcoin ETFs to pull in $55 billion in their first five years. His forecast is based on how demand evolved in smaller markets where spot bitcoin ETFs already exist, such as Canada.

However large demand turns out to be, it is unlikely to sustain offerings from all the asset managers vying for a slice of the action, said Steve Sosnick, chief strategist at Interactive Brokers.

"Are all of them going to be a success? Of course not," he added. "The ones with the best marketing will succeed, but half will be gone within two years."

(Reporting by Suzanne McGee; Graphic by Vineet Sachdev; Editing by Ira Iosebashvili, Michelle Price and Pravin Char)