Could Bitcoin ETFs Take a Page from Gold’s Playbook to Boost the Crypto Market?
Last week, the U.S. Securities and Exchange Commission (SEC) gave the green light to 11 spot Bitcoin exchange-traded funds (ETFs), amassing a total volume of $4.37 billion. If history repeats itself, these ETFs could send Bitcoin’s price soaring.
Prior to the official approval, rumors of a spot Bitcoin ETF caused Bitcoin’s price to surge above $48,000. However, it quickly dipped when the rumors were debunked. Once the SEC confirmed the ETFs’ listings, Bitcoin experienced a sudden surge to nearly $49,000 only to drop to $42,300 at the time of writing.
Drawing parallels to the launch of the first gold ETF in the United States in November 2004, CCData’s Institutional Primer emphasizes the potential impact of a spot Bitcoin ETF by highlighting the effect it had on the precious metal’s price. Following the launch, gold’s price steadily climbed from approximately $375 to $442, peaking at $454 due to significant inflows. However, it later retraced to $411 in early February 2005, suggesting a similar pattern may emerge for Bitcoin’s price: a surge with anticipation, a brief breakout, and now a possible healthy correction.
Nevertheless, by August 2011, the price of gold reached an all-time high when the SPDR Gold Shares (GLD) ETF became the largest ETF globally, surpassing the value of the SPDR S&P 500 Trust ETF. With Bitcoin vying against gold to become the preferred alternative asset class for storing value, the report suggests that the long-term growth potential for Bitcoin is worth contemplating.
Since the launch of its first ETF, gold’s price has skyrocketed to trade at $2,050, marking a remarkable 445% increase over the last two decades. Although Bitcoin’s performance has exceeded gold’s, its market capitalization currently stands at $830 billion compared to gold’s $13.7 trillion.
Image via Unsplash.