Bitcoin ETF launch may be a ‘let down’ but could attract trillions over time
The launch of spot Bitcoin exchange-traded funds (ETFs) won’t likely have much impact on Bitcoin (BTC), but they could eventually bring in trillions of dollars to the cryptocurrency sector, according to VanEck adviser Gabor Gurbacs.
In a Jan. 1 post to X (formerly Twitter), Gurbacs argued that the “initial impact” of a Bitcoin ETF is being drastically overestimated — estimating it may only see net inflows of around $100 million from “mostly recycled” money from large institutional investors upon launch.
In my view, people tend to overestimate the initial impact of U.S. Bitcoin ETFs. I think maybe a few $100mm flows (mostly recycled) money.
— Gabor Gurbacs (@gaborgurbacs) December 31, 2023
Long term, people tend to underestimate the impact of spot Bitcoin ETFs. If history is any guide, gold is worth studying as a parallel. https://t.co/6vvkA9aC09
However, Gurbacs was far more bullish about the ETFs’ impact on Bitcoin over the long term, pointing to the gold price appreciation that came after the launch of gold ETFs.
On Nov. 18, 2004, global investment advisory firm State Street launched the first gold ETF. Gurbacs explained that in the eight years following the launch, the price of gold more than quadrupled from $400 to $1,800. This outsized appreciation saw the total market capitalization of gold grow from $2 trillion to $10 trillion within the same time frame.
Bitcoin commands a market cap of $834 billion today, approximately 41% of the market capitalization of gold in 2004.
Related: Bitcoin ETF approval won't trigger crypto market rally — Options Data
Gurbacs believes that following the widely expected approval of a spot Bitcoin ETF in the United States, Bitcoin’s price trajectory could well follow in gold’s footsteps, but it would likely occur “much faster” due to its capped supply and scarcity-increasing events like the halving.
He added that one of the most crucial benefits of a spot Bitcoin ETF comes from its ability to legitimize and destigmatize Bitcoin in the eyes of institutional investors and nation-states.
Bloomberg ETF analysts Eric Balchunas and James Seyffart agreed with Gurbacs.
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
Seyffart agreed that while many are laser-focused on the short-term data points like day-one inflows into the ETF, they’re not fully appreciating the long-term impact of such a product.
Bitcoin is currently trading for $42,525, up 1.1% in the last 24 hours, per TradingView data.
While some argue the expected approval would create a significant and long-lasting uptick in price immediately following the decision, others claim it would be a “sell the news” event.
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