PEOPLEBITCOIN

Reviewing "Gold ETF" Predicts Bitcoin Trends, Breaking Historical Highs in Four Years Is Not a Dream

share
Reviewing "Gold ETF" Predicts Bitcoin Trends, Breaking Historical Highs in Four Years Is Not a Dream

Investors seem increasingly optimistic about the approval of a Bitcoin spot ETF. After surging from below 30,000 to above 34,000 last week, Bitcoin's price has remained stable. Often referred to as digital gold, will Bitcoin, like gold ETFs, bring a significant boost to market prices? Let's take a look at how Chinese cryptocurrency influencer Phyrex predicts the trend of Bitcoin!

Bitcoin is like digital gold

BlackRock CEO Larry Fink mentioned in a previous interview that Bitcoin is like digital gold.

Just as people invest in gold for hedging purposes and to avoid inflation, Bitcoin is an international asset that does not belong to any one country. It is like digital gold, representing an alternative asset that people can use.

Due to its fixed supply and status as a global asset, it can serve as a tool for hedging and inflation resistance. Importantly, the Bitcoin market is still in its early stages of development, with limited investment channels and technical barriers. Comparing the Bitcoin market to the gold market in 2004, people hope that the approval of a Bitcoin spot ETF will bring more funds and upward potential to the Bitcoin market.

Venture partner Adam Cochran tweeted in June, analyzing why BlackRock's entry into the market is so important! He mentioned the development of the gold ETF, which had a market size of only $1 trillion before BlackRock's entry, but grew to $13 trillion after his entry. It also highlights the importance of ETFs for general investors to enter the market.

For more analysis, please see: What are the differences between Bitcoin spot ETF and futures ETF?

How will Bitcoin perform after the approval of a Bitcoin spot ETF?

Chinese cryptocurrency influencer Phyrex published a long article on X, estimating the trend of Bitcoin after the approval of a Bitcoin spot ETF, using the gold ETF as a benchmark.

Trends in gold after the introduction of ETFs

In 2004, State Street Bank launched the first gold ETF—SPDR Gold ETF with the ticker symbol GLD, which is the largest in terms of scale among all gold ETFs, with a market value of approximately $55.3 billion.

Phyrex illustrated the trend of gold since 2004 and made the following analysis:

  • In the first four months after the introduction of the gold ETF, the price of gold almost only rose, indicating market expectations.
  • After the fourth year of the ETF approval, gold broke through the previous historical high of $873.
  • In less than seven years, the price rose to $1,921.
  • At that time, about 5 billion ounces of gold had been mined, corresponding to a market value of about $2 trillion. Today, 19 years later, the market value of gold has risen to $13.27 trillion, an increase of over 6.6 times. The total mined gold is only about 6.6 billion ounces, indicating that the amount of gold mined in the past 19 years has only increased by 32%, but the price has increased 4.5 times.

Predictions for Bitcoin's trend

Phyrex predicts that Bitcoin is likely not to start rising immediately after the approval of a spot ETF, and it may consolidate for a period of time or even experience a brief decline. Looking at the timeline, if a spot ETF is approved between January and March next year, it coincides with Bitcoin's halving cycle after consolidation. Additionally, it is during the US presidential election period, and in 2024, the Federal Reserve will inevitably enter a pause in raising interest rates, which should stimulate positive sentiment across the market.

If Bitcoin's trend can align with that of gold, even if the increase is only half or a quarter of gold's, Bitcoin's market value will return to trillions, and the price will surpass the high of $69,000 in 2021 within four years. Therefore, relatively speaking, it is currently at a low point.