Cryptocurrency market investors are anticipating a spot Bitcoin exchange-traded fund (ETF) approval by the US Securities and Exchange Commission (SEC). It has been a matter of curiosity how gold, to which Bitcoin is often compared and similarly seen as a store of value, performed when it was an exchange-traded product.
The first exchange-traded gold product was established in 1961, but it was not a spot ETF like the current Bitcoin applications. It is thought that an exchange-traded fund needs to be listed on US exchanges in order to reveal its true identity. Therefore, to compare gold with current Bitcoin filings, we need to examine the date of approval from the US.
The first spot gold ETF in the US was opened for trading by the New York Stock Exchange (NYSE) Arca on November 18, 2004 under the name "SPDR Gold Shares" (GLD), which was applied for by Boston-based financial services company State Street Corporation. The GLD ETF is based on physically stored gold reserves and is traded like a stock.
The ETF in question exceeded 1 billion dollars in assets in the first three trading days. Currently, GLD, the largest gold-based ETF, holds over $40 billion in assets.
At the time, the approval of GLD was interpreted as a turning point for the gold market. Prior to the ETF, investors had to physically buy gold or open positions in the futures market.
The approval of the ETF increased the liquidity of the gold market, simplified the process of investing and paved the way for the growth of the investor base.
After the approval process, gold emerged as one of the most in-demand products on the market. On the other hand, the gold ETF is thought to have inspired the emergence of other commodity-based ETFs and the current Bitcoin ETF applications.
The gold ETF has multiplied its market capitalization several times since its launch. In addition, gold, which was in the $ 400 band in 2004, showed a growth performance of 370% in 6 years.
Bitcoin's likely performance
Similar to the Spot Bitcoin ETF approval, the fact that Bitcoin will be held as a reserve and its active supply is currently low seems to be a sign for an increase in the price. With the Bitcoin ETF, it is almost certain that investors will reach a wider audience and demand more.
Compared to the gold ETF, it is estimated that the transaction volume and liquidity will increase and the total asset value will climb higher.
With a possible approval by the SEC, the fact that the Bitcoin ETF will take place on US stock exchanges and more than 10 asset management companies will hold Bitcoin is a very positive step for the cryptocurrency market.
Just like gold, Bitcoin is expected to increase in price in the long run and be regulated as a commodity. Analysts in the cryptocurrency market think that with the approval of the Bitcoin ETF, the price will experience a huge rise and increases of up to 3-4 times as in gold.
According to Chales Yu, a researcher at Galaxy Digital, Bitcoin will rise by 6.2% in the first month after the approval of spot ETFs and will increase by 74% in a year.
However, since the cryptocurrency market is still unregulated and volatile, a "sell the news" situation is expected to occur in January.