After a decade-long incubation period, spot Bitcoin ETFs have exploded onto the scene to unrivaled market enthusiasm. It’s been enough for Bitcoin to reach over $50,000 in the past week, reclaiming a price point it last held in late 2021 – and for Michael Saylor of Microstrategy to declare Bitcoin to be the “world’s most popular investment asset.”
Saylor continues: “It’s novel, it’s digital, it’s global, it’s unique, and it’s uncorrelated to traditional risk assets because it doesn’t come with exposure to any given country, currency, company, quarterly result, product cycle, competitor — not to weather, not to war, not to an employee base or supply chain.”
The pent up demand from the past 10 years for a spot Bitcoin ETF has fed the recent bump, Saylor asserts, though he acknowledged the initial bear market was a “rebalancing” that was necessary as capital was being moved around and miners attempted to adjust to the new situation.
“Following that rebalancing, I think the asset’s found its footing and now people are beginning to realize that there’s 10 times as much demand for Bitcoin coming in through these ETFs as there is supply coming from the natural sellers who are the miners,” Saylor says.
It’s easy to see what Saylor’s getting at. The SEC’s approval of 11 spot bitcoin ETFs to start trading on January 11 earlier this year caused a slump, but that quickly corrected itself and has sent the coin higher than it’s been in two years.
Source: Yahoo Finance
But what can we expect beyond the boost from the spot ETFs? A better question to ask is how high could the value of Bitcoin potentially go now that spot ETFs have been approved.
To help determine this, some market analysts are looking at how the gold market behaved once gold spot ETFs were finally approved in 2004. In the few years that followed, the gold market went from a value of between $1-2 trillion to a titanic $16 trillion. “Bitcoin’s adoption will be much faster and bigger than that,” says Vijay Ayyar, VP of crypto exchange CoinDCX.
In other words, the “bounce” that we are seeing from the bitcoin spot ETFs may not be a bounce at all – but rather a surge to a baseline characterized by unimaginable new heights. There’s a reason more than one expert in the room is anticipating a $30 trillion bitcoin market with coins valued at more than $300,000 within the near future.
It’s not just the approval of the spot ETFs that’s fueling the boom, of course. There’s also the upcoming Bitcoin halving in April; the increasing acceptance and regulation by governments around the world; and the instability of fiat currencies driving up inflation and causing investors of all sizes to seek a safe haven for their assets. Plus with a government shutdown looming almost every year, it’s no wonder people want something further removed from the instability of national politics.
Saylor’s got it right when he says that crypto is here to stay, and he’s putting his money where his mouth is with Microstrategy’s purchase of 850 BTC this past January. Those of us who are here for the long-term for cryptocurrency are glad to see the ship righting itself and taking on new passengers – with no sign of slowing down.
