Owotunse Adebayo
Vaneck’s Director of Digital Assets Strategy, Gabor Gurbacs, recently shared insights into the potential long-term impact of a U.S. spot bitcoin exchange-traded fund (ETF) on social media. Vaneck is among several asset management firms seeking approval from the U.S. Securities and Exchange Commission (SEC) to launch such an ETF.
VanEck’s Grubacs drums the future impact of spot Bitcoin ETFs
While the VanEck director acknowledges that people might initially underestimate the immediate impact of U.S. bitcoin ETFs, projecting it to be only a few hundred million dollars, mainly from recycled funds, he emphasizes the long-term consequences. According to him, there is a tendency to overlook the broader picture. Gurbacs suggests that Bitcoin is fundamentally reshaping its capital markets and products beyond just the ETF, and this transformative effect is not yet fully reflected in market expectations.
He poses a significant question: it’s not about which traditional financial institution like Blackrock adopts Bitcoin but rather which Bitcoin-centric company emerges as the next Blackrock. Drawing parallels with historical events, the VanEck director points to the importance of studying gold as a reference point. Referring to his post from December 6, he details how the approval of a U.S. spot Bitcoin ETF could generate trillions of dollars in value for Bitcoin. He highlights the example of the SPDR Gold Shares ETF (GLD), introduced on November 18, 2004. Over the subsequent eight years, the price of gold surged from $400 to $1,800, resulting in an addition of approximately $8 trillion in market capitalization.
Bitcoin and its similarities to the historical rise of Gold
This propelled gold from around $2 trillion to roughly $10 trillion in total market cap. VanEck’s director of digital asset strategy stresses that Bitcoin’s current market cap stands at approximately $750 billion, less than one-third of what gold was in 2004. However, he proposes that, upon the SEC’s approval of a U.S. spot bitcoin ETF, Bitcoin’s price trajectory could mimic gold’s pattern from 2004 onwards but at a much faster pace. While expressing confidence that the adoption of bitcoin exchange-traded products (ETPs) will bring in only a few tens of billions, he acknowledges that the impact will be substantial.
This is attributed to factors such as a relatively low Bitcoin float, characterized by strong hands and long-term holders, and systematic scarcity resulting from halving schedules. VanEck’s director of digital asset strategy underlines that the ETF’s approval would not only legitimize and destigmatize Bitcoin’s role in investment portfolios but also drive further adoption beyond the realm of ETFs. He predicts that nation-states and sovereign wealth funds will opt to hold bitcoin directly, securing flexibility for mining and establishing their bitcoin-based capital markets.
Drawing a parallel with gold adoption, Gurbacs notes that central banks played a pivotal role in driving up gold prices outside of ETFs, emphasizing the critical role that ETPs played in making investors comfortable with gold. Gabor Gurbacs envisions a transformative future for Bitcoin, drawing parallels with gold’s historical trajectory following the introduction of a gold ETF. While acknowledging the initial underestimation of the immediate impact, he emphasizes the potential for trillions of dollars in value creation for Bitcoin in the long run, driven by increased adoption and recognition facilitated by a U.S. spot bitcoin ETF.
