Often referred to as “digital gold,” Bitcoin (BTC), the world’s largest cryptocurrency, is frequently compared to the traditional precious metal. Both BTC and gold are considered to possess qualities of sound money and are regarded as ultimate safe-haven assets due to their limited supply and scarcity. With the growing attention towards exchange-traded funds (ETFs), people are drawing comparisons between the performance of this chemical element ETFs and the potential impact of Bitcoin ETFs.
The first gold ETF was approved in the United States in 2004, leading to a remarkable surge in their prices of nearly 350% between 2004 and 2011. During this period, the price of this chemical element skyrocketed from approximately $450 to over $1,820 in August 2011, representing an astonishing increase of 346%. Taking this historical trend into account and assuming that Bitcoin ETFs also receive approval, Ash Crypto made predictions about the potential price of BTC.
However, the feasibility of a Bitcoin ETF remains uncertain at present. In a recent report, NYDIG highlighted the substantial investments required for gold funds, with over $210 billion invested in such funds compared to just $28.8 billion in Bitcoin funds. The report noted that Bitcoin is approximately 3.6 times more volatile than gold, which means that investors would need 3.6 times less Bitcoin than latter, on a dollar-for-dollar basis, to achieve the same level of risk exposure. Despite the higher volatility, this would still result in nearly $30 billion of additional demand for a Bitcoin ETF.
Considering the current hype surrounding these financial products, it is anticipated that their adoption will continue to rise in the future.
Gold’s Priceless Trajectory
Since the first U.S. ETF for gold was approved, the market has undergone numerous changes. While ETFs did contribute to increased demand for this element, its substantial growth was mainly driven by a favorable macroeconomic environment. Factors like the 2008 housing market crisis, the depreciation of the dollar, China’s economic rise, and a growing U.S. deficit all played crucial roles in bolstering gold’s value.
For Bitcoin to potentially experience significant growth, it would rely on the continued depreciation of the dollar and broader adoption of cryptocurrencies, in addition to the approval of ETFs. NYDIG pointed out that while the GLD ETF (gold ETF) certainly had a positive impact and brought inflows to the gold market, the macroeconomic factors were the primary drivers during that period. A potential spot Bitcoin ETF can increase interest in Bitcoin and attract new investments, but it alone wouldn’t be enough to skyrocket the value of one Bitcoin to $100,000.