LUCKNOW (CoinChapter.com) — The approval of the US’s first spot Bitcoin ETF may not immediately elevate Bitcoin prices but could eventually channel trillions into the cryptocurrency market, according to VanEck advisor Gabor Gurbacs. He argues that expectations of significant short-term Bitcoin price surges from an ETF launch are unrealistic. He forecasts modest initial inflows of about $100 million, mainly from institutional investors shifting current crypto holdings.
Will History Repeat? Gold’s 400% Surge Offers Clues to Bitcoin’s Future
However, Gurbacs was much more optimistic about the long-term implications for Bitcoin stemming from a spot ETF approval.
He highlighted the over 400% surge in gold prices in the 8 years following the launch of the first gold-backed ETF by State Street on November 18, 2004. Gurbacs explained that in that period, the price of gold climbed from $400 to over $1,800 per ounce. This massive appreciation boosted the total market capitalization of gold dramatically, from $2 trillion in 2004 to over $10 trillion by 2012.
Gurbacs contends that a similar, if not more pronounced, price explosion could unfold for Bitcoin in the coming years if an ETF successfully brings mainstream investor dollars off the sidelines. Drawing parallels to the gold ETF moment, he believes the inflows and validation from Wall Street could ignite Bitcoin’s next bull cycle, fueled by its inherent supply scarcity.
The current market cap of Bitcoin is $834 billion, which is around 41% of gold’s $2 trillion valuation in 2004. Gurbacs believes its post-ETF trajectory could mirror gold’s meteoric rise but at an accelerated rate due to its fixed supply and events like the halving, which further constrain supply over time.
One of the greatest potential impacts, he added, is an ETF’s capacity to validate and destigmatize Bitcoin in the eyes of institutional investors and governments worldwide.
Mainstream Validation or Short-Term Hype?
Bloomberg ETF analysts Eric Balchunas and James Seyffart agreed with Gurbacs’ long-term perspective.
Seyffart agreed that while many focus on speculative short-term metrics like initial ETF inflows, the true impact lies in expanding mainstream, regulated access to Bitcoin investing over the long haul.
Despite some concerning on-chain metrics like rising exchange supplies that typically precede selling pressure, Bitcoin has so far held steady above $42,000 in early 2024. As of January 2nd, 2024, Bitcoin hovered around $45,738, up 2.7% over the prior 24 hours, as per TradingView data.
While some expect an ETF green light could promptly catalyze major gains, others contend it may ultimately prove underwhelming or even spark near-term selling pressure.
