How the Bitcoin ETF Darling Plans to Eclipse Traditional Assets
Bitcoin ETF Takes Center Stage, a Safe-Haven Investment, traditionally viewed asset type has stiff competition in this alternative world; instead there could be Bitcoin Exchange-Traded Funds (ETFs) on the market in 2024.
If Bitcoin ETFs are approved, according to Joy Yang, Global Head of Index Product Management at MarketVector Indexes, the appeal of a “shiny new thing” could anchor gold prices around $2,000 an ounce for the year while people sought this kind of investment.
Yang thinks that Bitcoin, with its rising popularity and support from behind the scenes in large numbers, might come out as alternative investment favorite. This could be an expiration of gold, which has been the go-to safe haven but is now standing so high up on top that markets might become crowded too.
The Securities and Exchange Commission (SEC) have number of Bitcoin ETF applications are under consideration . Top analysts in the industry have high hopes for approval including a Bloomberg Intelligence analyst and Eric Balchunas.
Bitcoin’s rise to a record high of nearly $69,000 per token in 2021 challenged the gold market in a similar manner; gold prices dropped by a percentage not much less than 3%. Cryptocurrencies are being discussed again and there is little doubt among market analysts that they will have a relatively minor impact on the gold market.
But Yang has expressed optimism, saying she does not think gold prices will be less than $2,000 per ounce for long. Set against a background of history, the debut of Bitcoin ETFs already outpaces initial numbers for Gold ETFs. Digital gold has a strong presence in the market without trading having started as the example of today’s topic.
When the first Gold ETF was launched in 2004, compared with the first ProShares Bitcoin Strategy ETF in 2021 and the upcoming 11 spot Bitcoin ETFs in 2024, it became clear that the market presence of Bitcoin is set to overtake that of gold.
The launch day volume of the initial Gold ETF was $114.92 million in assets, ProShares received $570 million on day one and hit $1 billion on day two. The combined assets under management of spot Bitcoin ETFs are set to exceed the day-one trading figures of Gold ETFs. If Grayscale is included, the spot Bitcoin ETFs will have more assets under management than gold did in the first five years.
Examining the trading performance at launch, the first gold ETF experienced a 2.82% increase in the price of gold within 12 days the other hand, the price of Bitcoin has increased. Over the last decade, it has risen 7,082%, even when adjusted for increases in the M2 money supply. Its chief difference from gold is that Bitcoin is rare. It’s a fundamentally scarce asset with only 21 million available coins.
Under the proposed Bitcoin ETF, part of the tiny supply of Bitcoin will now be locked up to back-spot Bitcoin products. Prices could soar accordingly. The world’s largest gold ETF in terms of assets held under management is GLD, with assets under management totaling $56 billion; the United States has a total of around $114 billion invested in all gold exchange-traded funds.
Comparatively, the potential AUM for spot Bitcoin ETFs is substantial, with analysts suggesting that the market has room for growth, albeit in a tight market.
As the crypto market evolves, drawing parallels between the impact of Gold ETFs and the potential influence of spot Bitcoin ETFs reveals that Bitcoin’s unique attributes could lead to a more profound and transformative effect on the market, surpassing the impact observed with gold. The question remains: Will Bitcoin dwarf gold in the eyes of investors, becoming the digital gold of the future?
