Analyze the impact of spot ETFs on Bitcoin prices with gold ETFs as a reference
After the launch of the gold spot ETF, gold has risen by 500% over the past 5 years.Original Title: 《A BTC ETF is a watershed moment》
Original Author: Cryptojoe
Original Compilation: Odaily Planet Daily
A Bitcoin ETF is a significant watershed moment because it can quickly meet the expectations of (traditional) market demand without a long waiting period. The Bitcoin ETF will attract the interest of various investors, especially institutions such as family offices, private banks, and hedge funds, as it provides a compliant way to gain exposure to spot Bitcoin globally. If there is billions of dollars in demand in the market, it will have a substantial impact on Bitcoin's price. Institutions offering the ETF will also be incentivized to sell as much of this product as possible. Overall, the Bitcoin ETF marks an important turning point and will have a profound impact on the entire market.
The following is published by Cryptojoe on X (Twitter) and compiled by Odaily Planet Daily.
Why a Bitcoin ETF is a Watershed Moment
ETF Approval -> ETF Trading
Taking the ETH futures ETF as an example, we can see how quickly the ETF tool begins trading.
In this case, it only took 5 days between approval and official trading. Why?
Because there is not a long time between anticipated demand and the realization of that demand. If the gap is several months, then it is more likely that the market is "selling the news."
The Demand Dilemma
But if no one buys the ETF, then none of this matters. So who will buy it? Why?
- The Gold Model
Historically, only two ETFs reached a scale of $1 billion in the first 3 trading days:
Gold (2004)
Bitcoin Futures (2021)
After the launch of the gold spot ETF in 2004, gold rose by 500% in the following 5 years. The data illustrates how important spot ETFs are.
- Why is a Bitcoin Spot ETF a Breakthrough?
Because it provides meaningful exposure to spot Bitcoin globally in a compliant manner. There are significant entry barriers from KYC to custody to regulation, preventing hundreds of billions of dollars from entering. So what types of investors are there?
For example, family offices, private banks, and hedge funds find that their ideal product is a Bitcoin ETF.
I estimate that among the investors below, the market size could be between $10-20 billion.
What would happen if there was $10 billion in demand in the spot market? With the current trading depth, it would take about $100 million to raise the Bitcoin spot market by 10%.
However, ETF inflows may take some time and are influenced by the following factors:
Halving
Credit tightening -> Quantitative easing
Geopolitical uncertainty.
However, from my personal perspective, I can clearly see the potential impact of the ETF on Bitcoin's price.
Fees are King: Incentivizing Institutions to Sell ETH
ETF providers are motivated to sell as much of the ETF as possible. In 2022, ETF fee revenue exceeded $100 billion, with an average fee rate of 0.37%. The total assets under management for ETFs are approximately $7 trillion.
