The approval of the first physical gold ETF in 2003 propelled the precious metal from $350 to more than $1,800 an ounce in 10 years. As the SEC examines a possible Bitcoin ETF, is history about to stutter for the queen of cryptos?
Could the post-ETF gold boom be repeated for Bitcoin?
When the first gold ETF was approved in 2003, a gold rush ensued. In just 10 years, its price has risen from $350 to more than $1,800 per ounce. This accessibility has allowed a new category of investors to easily access it. With a possible SEC green light for a Bitcoin ETF, a similar dynamic could occur.
The upcoming arrival of such an investment vehicle dedicated to Bitcoin would attract up to $70 billion in the first year, according to analyzes from Glassnode. Others are more cautious, like Galaxy Digital which estimates more 14 billion the first year, then 27 billion the second.
This influx would come from both traditional stock markets and gold. These professional investors would reallocate part of their assets towards Bitcoin to diversify and maximize their returns.
A limited offer
Unlike gold, which has been mined for millennia, the supply of Bitcoin is perfectly inelastic: only 21 million Bitcoins will ever be issued.
Currently, approximately 24% of Bitcoin in circulation is held by short-term investors who may trade. And the liquid supply decreases as more tokens are removed from circulation to be locked in long-term storage.
As a result, a sudden influx of capital risks sending the price soaring. Especially since long-term holders continue to accumulate: today more than 75% of Bitcoin in circulation have been held for more than 155 days.
The arrival of the Bitcoin ETF therefore promises to be explosive. According to Galaxy Digital, the price of Bitcoin could jump 74% in the first year alone thanks to this new demand, not counting the speculative enthusiasm of the general public.
A must-have for every investor!
With the upcoming arrival of the first Bitcoin ETF, the market reaction promises to be extremely strong. Between massive demand from professional investors and limited supply, the price risks soaring.
This historic opportunity will establish Bitcoin as a must-have for any diversified portfolio, in the same way as gold as a safe haven against inflation and geopolitical instability.
Although risky for some uninformed investors, this ETF will arouse the enthusiasm of hedge funds, family offices and wealth managers, kicking off a frantic race towards Bitcoin. Those who jump on the bandwagon will expose themselves to significant returns.
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