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The Long-Term Impact of Spot Bitcoin ETFs and Comparison to Gold

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Introduction

Vaneck's Director of Digital Assets Strategy, Gabor Gurbacs, has shed light on the underestimation of the long-term impact of spot Bitcoin exchange-traded funds (ETFs). He believes that once the U.S. Securities and Exchange Commission (SEC) approves a spot Bitcoin ETF, Bitcoin's price trajectory could emulate the growth pattern of gold from 2004 onwards, but at a much faster pace.

Market Impact of Spot Bitcoin ETFs

Gabor Gurbacs, Vaneck's Director of Digital Assets Strategy, recently shared his predictions regarding the long-term impact of U.S. spot Bitcoin exchange-traded funds (ETFs) on the social media platform X Sunday. Vaneck is one of the asset management firms that have applied to launch a spot Bitcoin ETF with the SEC.

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Underestimation of Spot Bitcoin ETFs

Gurbacs notes that people often overestimate the initial impact of U.S. Bitcoin ETFs, which he expects to be only a few hundred million dollars, mainly from recycled funds. However, he emphasizes that the long-term impact of spot Bitcoin ETFs is often underestimated.

He points out that Bitcoin is transforming its own capital markets systems and products, extending beyond the ETF. This transformation is not yet priced into the market. He believes that the focus should not be on what Blackrock adopts, but rather on identifying the next Blackrock-like Bitcoin company.

Gold as a Parallel

Gurbacs draws a parallel between Bitcoin and gold by highlighting the historical pattern of gold's price growth. He refers to his previous post on December 6, where he explains that the approval of a U.S. spot Bitcoin ETF could potentially create trillions of dollars in value for Bitcoin.

He mentions that the SPDR Gold Shares ETF (GLD) was introduced on November 18, 2004, and in the subsequent eight years, gold's price quadrupled, reaching $1,800. This led to an increase of approximately $8 trillion in market capitalization, from around $2 trillion to $10 trillion.

Potential Price Trajectory of Bitcoin

Gurbacs predicts that if a U.S. spot Bitcoin ETF is approved, Bitcoin's price trajectory could follow a similar pattern to gold's growth from 2004 onwards, but at a much faster pace. He notes that Bitcoin's current market cap is around $750 billion, less than one-third of gold's market cap in 2004.

He also adds that the adoption of Bitcoin exchange-traded products (ETPs) may contribute only a few tens of billions of dollars, and the inflow of funds won't happen all at once. However, Gurbacs believes that the boost will still be significant due to factors such as a relatively low Bitcoin float and systematic scarcity through halving schedules.

Legitimization and Adoption

Gurbacs stresses that the approval of a Bitcoin ETF will legitimize and destigmatize Bitcoin as an asset class, leading to further adoption outside of the ETF. He predicts that nation states and sovereign wealth funds will directly hold Bitcoin and explore its potential for mining and their own Bitcoin-based capital markets.

He draws a comparison to the adoption of gold by central banks outside of ETPs, which played a crucial role in driving up the price of gold. Gurbacs believes that a similar scenario could unfold for Bitcoin.

Conclusion

Gabor Gurbacs, Vaneck's Director of Digital Assets Strategy, highlights the potential long-term impact of spot Bitcoin ETFs, drawing a parallel to gold's historical growth pattern. He believes that the approval of a U.S. spot Bitcoin ETF could lead to a significant increase in Bitcoin's price, following a trajectory similar to that of gold but at an accelerated pace. The legitimization of Bitcoin through the ETF could also drive further adoption and exploration of Bitcoin-based capital markets by nation states and sovereign wealth funds.

What are your thoughts on the impact of spot Bitcoin ETFs on Bitcoin? Let us know in the comments section below.

Frequently Asked Questions

Should You Buy Gold?

In the past, gold was considered a haven for investors during economic turmoil. Many people are shifting away from traditional investments like bonds or stocks to instead look toward precious metals such gold.

Gold prices have been on an upward trend over recent years, but they remain relatively low compared to other commodities such as oil and silver.

This could be changing, according to some experts. Experts predict that gold prices will rise sharply in the wake of another global financial collapse.

They also mention that gold is becoming more popular due to its perceived worth and potential return.

These are some things you should consider when considering gold investing.

  • Consider first whether you will need the money to save for retirement. You can save money for retirement even if you don't invest in gold. The added protection that gold provides when you retire is a good option.
  • Second, make sure you understand what you're getting yourself into before you start buying gold.There are several different types of gold IRA accounts available. Each offers varying levels of flexibility and security.
  • Keep in mind that gold may not be as secure as a bank deposit. If you lose your gold coins, you may never recover them.

So, if you're thinking about buying gold, make sure you do your research first. You should also ensure that you do everything you can to protect your gold.

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Can I own a gold ETF inside a Roth IRA

While a 401k may not offer this option for you, it is worth considering other options, such an Individual Retirement Plan (IRA).

Traditional IRAs allow for contributions from both employees and employers. An Employee Stock Ownership Plan (ESOP) is another way to invest in publicly traded companies.

An ESOP provides tax advantages because employees share ownership of company stock and profits the business generates. The tax rate on money that is invested in an ESOP is lower than if it was held in the employees' hands.

A Individual Retirement Annuity (IRA), is also available. You can make regular payments to your IRA throughout your life, and you will also receive income when you retire. Contributions made to IRAs are not taxable.

What is the best precious-metal to invest?

This question is dependent on the amount of risk you are willing and able to accept as well as the type of return you desire. While gold is considered a safe investment option, it can also be a risky choice. If you are looking for quick profits, gold might not be the right investment. You should invest in silver if you have the patience and time.

Gold is the best investment if you aren't looking to get rich quick. Silver might be a better investment option if steady returns are desired over a long period of time.

Statistics

  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
  • The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
  • (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
  • You can only purchase gold bars at least 99.5% purity. (forbes.com)
  • Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)

External Links

wsj.com

bbb.org

law.cornell.edu

investopedia.com

How To

Guidelines for Gold Roth IRA

Start saving as soon as possible to save for your retirement. As soon as you become eligible, which is usually around age 50, start saving and keep it up throughout your career. You must contribute enough each year to ensure that you have adequate growth.

You may also wish to take advantage of tax-free investments such as a SIMPLE IRA, SEP IRA, and traditional 401(k). These savings vehicles permit you to make contributions, but not pay any tax until your earnings are withdrawn. This makes them a great choice for people who don’t have access employer matching funds.

It's important to save regularly and over time. You'll miss out on any potential tax benefits if you're not contributing the maximum amount allowed.

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