69,000 times in 15 years has become history. The approval of Bitcoin spot ETF may usher in a new era

On January 11, Beijing time, the long-awaited Bitcoin spot ETF was finally approved, and the concerns of various institutions and investors were finally put to rest.

The leak of the news of the approval of the Bitcoin spot ETF the day before caused crypto investors to experience a roller coaster mood in advance, but now, everything is a foregone conclusion.

Since the positive news that the Bitcoin spot ETF was about to be approved was released in October last year, the price of BTC has been rising all the way, from around US$26,500 to about US$48,000, an increase of 81%. The rest of the altcoins have even set off a small bull market climax.

Now that the Bitcoin spot ETF has been successfully approved, the most concerning issue for investors is how will the BTC price trend in the future? Is the stimulating effect of this good news just an appetizer or has it been exhausted? BTC is known as "digital gold". Today, Golden Finance will review the market reaction before and after the gold ETF was approved and review the views of various authoritative people to provide market references for this event in the cryptocurrency circle.

1. Gold price trend before and after gold ETF approval

The value of gold is unquestionable. It ranks first in the global asset class ranking and is nearly 4 times ahead of Apple, which ranks second. As the price of BTC reaches above $47,000, its market value also surpasses Meta (formerly Facebook) and ranks among the ninth largest assets in the world.

As an emerging asset class, BTC has only been around for 15 years. However, the false news of the approval of the Bitcoin spot ETF has caused the price of BTC to continue to rise. After the rumor was debunked, the search volume of the Bitcoin ETF Google search index reached a record high of 100. It can be seen that the market's attention and enthusiasm for this event are very high.

BTC is regarded as "digital gold", and the crypto industry believes that in the future it will have the same value attributes as physical gold in the digital world.

The world's first gold ETF (GOLD) was officially listed on the Australian Stock Exchange on March 3, 2003. However, since Australia is not a world economic center and people are not very familiar with gold ETFs, it was not popular among investors at the time and was more of an experimental product.

It was not until 2004 that the US StreetTracks GoldTrust Fund (GLD) was listed on the New York Stock Exchange as a gold ETF that it became well-known and caused a sensation. The specific timeline was that it was approved by the SEC in late October of that year and began trading in November.

Currently, GLD's gold trading volume ranks first among all gold ETFs, and some countries have subsequently launched gold ETFs.

Data released by the World Gold Council (WGC) show that the total gold holdings of various institutions are currently 3,225 tons. However, due to the rise in gold prices, the total size of global gold ETF asset management has risen to US$214 billion.

From the above chart, we can see that one year before the US passed the gold ETF in 2004, the price of gold per ounce was about $320 to $420. At the same time, before and after the ETF was passed, the interim high point of gold was around $450, but it was followed by a drop of about 10%, and continued to fluctuate sideways for nearly half a year.

This trend can also be seen from the price history of the StreetTracks GoldTrust Fund (GLD). As can be seen from the figure, since its approval in November 2004, the ETF has been falling all the way, and the lowest point even appeared in early May of the following year.

Since then, the price of gold has been rising all the way to the present day, and it still maintains a relatively strong upward trend overall. However, we still need to see that with the development of time, there are many major events in the world that affect the price of gold, such as the Federal Reserve policy, geopolitics, economic crisis, etc.

This means that in fact, in the value trend of gold, the approval of the gold ETF can only be regarded as a small episode, and there are more factors that can influence the rise and fall of gold prices.

Similarly, the approval of the Bitcoin spot ETF may also be the same. Ultimately, it depends on the global economy's consensus on the value of BTC.

In February 2021, the world’s first Bitcoin ETF was passed in Canada, but since it was in the midst of a crypto bull market at the time, it is not of much reference value.

2. Views of various parties

According to Coingecko statistics, there are currently only 8 countries in the world that offer spot Bitcoin ETFs. The country with the most such ETFs is Canada: there are 7 spot Bitcoin ETFs with total assets of US$2 billion, accounting for 48.2% of the world's US$4.16 billion in spot Bitcoin ETF assets.

The others are Canada, Germany, Brazil and Australia, as well as the tax havens Jersey, Liechtenstein, Guernsey and the Cayman Islands.

The US Bitcoin spot ETF is about to be approved. How do various parties view this event and how do they judge the future trend of BTC?

Valkyrie Investments co-founder Steven McClurg expects as much as $200 million to $400 million to flow into its ETFs through the first week; he expects the first batch of 10 ETFs to be launched simultaneously, and the entire market to reach $5 billion in the first few weeks of trading.

Additionally, Steven McClurg predicts that Bitcoin will be worth $150,000 by the end of 2024 as a spot Bitcoin ETF could create a “supply shock” that would drive up demand.

Arthur Hayes, founder of crypto trading platform BitMEX , expects Bitcoin to experience a 20% to 30% correction in early March, and says the correction could be even greater if U.S.-listed Bitcoin spot ETFs have begun trading.

Hayes said that with hundreds of billions of fiat currencies expected to flow into these ETFs in the future, the price of Bitcoin could potentially climb to $60,000 or even approach its 2021 all-time high of $70,000. However, after reaching this high, he foresees that Bitcoin could face a significant correction of 30% to 40% due to a shortage of U.S. dollar liquidity .

Matrixport said MicroStrategy's stock price may indicate that Bitcoin is priced at $38,000 and Ethereum will outperform Bitcoin.

The reason given is that MicroStrategy is already an unofficial Bitcoin spot ETF and its share price has fallen 14% since the end of December, while Bitcoin has risen 8% during this period. The overlap of the two time series gives the impression that MicroStrategy's Bitcoin is priced at $38,000.

But previously Matrixport predicted that if the approval goes as expected, it is optimistic that the Bitcoin price will reach $50,000.

Coinbase Global released a report saying that in the long run, spot Bitcoin ETFs could add billions of dollars to the market value of the entire crypto market. ETFs will relax restrictions on large fund managers and institutions buying and holding Bitcoin, and may also open the door to new products such as loans, futures and options.

Cathie Wood, CEO of ARK Invest, said: "We believe that the SEC's approval will light the green light for institutional investors. In fact, it does not require institutions to allocate a large amount of Bitcoin for the value of Bitcoin to rise sharply because it is gradually becoming a scarce asset."

Wood also compared Bitcoin to digital gold and predicted that after the Bitcoin spot ETF is approved, there may be a substitution effect between Bitcoin and gold.

Analysts at Standard Chartered Bank pointed out that the event is expected to attract $50 billion to $100 billion in capital inflows this year. The bank also predicts that BTC will rise to $100,000 by the end of this year and further to $200,000 by the end of next year.

James Butterfill, head of research at CoinShares , said that driven by the possible approval of a Bitcoin ETF by the U.S. government, an increase of 20% in institutional investments from assets currently managed by asset managers (about $3 billion) could push the price of Bitcoin to $80,000.

Galaxy Digital : Bitcoin is expected to rise 74% within the first year of spot ETF approval (based on the Bitcoin price of US$26,920 on September 30, 2023); over a longer period of time, the potential size of funds invested in Bitcoin products is between US$125 billion and US$450 billion.

Shenyu, a KOL in the crypto circle, said that the approval of the ETF released a clear positive signal, which means that large blockchain assets such as Bitcoin and Ethereum have been accepted like traditional assets and have begun to enter balance sheets.

Guosheng Securities : With reference to the promotion of gold prices by the launch of gold ETFs, Bitcoin spot ETFs are worth looking forward to. If Bitcoin spot ETFs are approved, it means that the huge traditional wealth world recognizes Bitcoin and even the Web3.0 world, which will further accelerate the integration of the two.

Tether advisor Gabor Gurbacs: Whether the Bitcoin spot ETF has $500 million or $5 billion in capital flows in the first few weeks seems important, but it is not the case in the long run.

There are approximately $500 trillion in assets globally that can be accessed in Bitcoin in both physical and financial form. Assuming a 0.5% global allocation would mean a $2.5 trillion in capital flows, plus subsequent appreciation, and the resulting additional fund investments and credit.

However, there are also views that the approval of the Bitcoin spot ETF will not have much impact on the crypto market. For example, JPMorgan analyst Nikolaos Panigirtzoglou believes that the approval of the spot Bitcoin ETF will not bring in a large amount of new funds.

Those ETFs, which have been available in Europe and Canada, have seen “little to no investor interest since their inception,” he noted in a recent report.

In general, all sectors are generally optimistic about the subsequent BTC trend that the Bitcoin spot ETF can pass, especially the long-term prospects are very promising.

Summarize

The speculation in the crypto market about whether the Bitcoin spot ETF will be approved has reached a stage watershed. As the price of BTC has risen to a level close to the highs of the previous two bull markets, investors are inevitably worried about a market correction. However, if it is really as predicted by most institutions and mainstream opinions, then getting out of the market at this time means a higher cost of chips.

In the short term, it is indeed difficult to accurately predict the trend of BTC, but BTC has been growing after experiencing ups and downs in the 15 years since its birth. If the Bitcoin spot ETF is approved, it means that BTC, which has always been regarded as a niche asset, has the qualifications to enter a broader world.

So, having missed out on the 69,000-fold increase in Bitcoin in 15 years, will you continue to miss out on the wealth code that may mirror the price trend of gold in the next 10 years?