- The launch of spot Bitcoin ETFs may disappoint initially with an estimated $100 million in net inflows, but VanEck adviser Gabor Gurbacs sees long-term potential, drawing parallels to the gold market’s substantial growth post the introduction of gold ETFs.
- The anticipated approval of a spot Bitcoin ETF in the U.S. could legitimize Bitcoin, destigmatize it for institutional investors, and potentially attract trillions of dollars to the cryptocurrency sector.
Investors eyeing the imminent launch of spot Bitcoin exchange-traded funds (ETFs) may initially face disappointment as the expected impact on Bitcoin’s price remains modest. VanEck adviser Gabor Gurbacs suggests that the immediate inflow might be limited, estimating around $100 million, largely sourced from recycled funds of large institutional investors.
However, Gurbacs is optimistic about the long-term implications of Bitcoin ETFs, drawing parallels with the gold market. He highlights the gold price surge after the launch of gold ETFs in 2004. Over the following eight years, gold’s value quadrupled from $400 to $1,800, propelling its market capitalization from $2 trillion to an impressive $10 trillion.
The approval of a U.S. spot Bitcoin ETF may create $ Trillions in value.
— Gabor Gurbacs (@gaborgurbacs) December 6, 2023
On November 18, 2004, the SPDR (State Street) Gold ETF (GLD) was introduced.
In the subsequent 8 years gold’s price quadrupled+ from $400 to $1,800 adding ~$8 Trillion in market cap going from ~$2 Trillion… pic.twitter.com/eE5vasJwV5
Bitcoin, with its current market cap of $834 billion, represents only 41% of gold’s market cap in 2004. Gurbacs speculates that if the anticipated spot Bitcoin ETF receives approval in the United States, the trajectory of Bitcoin’s price could mimic gold’s growth but at an accelerated pace, attributed to Bitcoin’s capped supply and scarcity-increasing events like halving.
A crucial advantage of a spot Bitcoin ETF, according to Gurbacs, lies in its potential to legitimize and destigmatize Bitcoin, especially in the eyes of institutional investors and nation-states. Bloomberg ETF analysts Eric Balchunas and James Seyffart echo these sentiments, emphasizing the need to look beyond short-term data points and consider the long-term impact of such a product.
Seyffart notes that the focus on day-one inflows into the ETF might overshadow the profound influence it could exert over an extended period. The legitimacy brought by a spot Bitcoin ETF could reshape perceptions and attract trillions of dollars to the cryptocurrency sector.
Mostly in agreement with Gabor on this. Consensus seems to be (anecdotally) that People are focused on a massive short term impact that I think could be a bit of a let down while at same time not fully appreciating the potential longer term impacts. https://t.co/z69Wbffcu9
— James Seyffart (@JSeyff) December 31, 2023
As Bitcoin currently trades at $42,525, reflecting a 1.1% increase in the last 24 hours, the looming question remains: will the approval of a Bitcoin ETF lead to an immediate and sustained uptick in price, or is it poised to be a “sell the news” event? Only time will unveil the true impact of this pivotal moment in the cryptocurrency market.
