In a highly anticipated development, the United States Securities and Exchange Commission (SEC) granted regulatory approval for 11 spot bitcoin ETFs, generating excitement within the crypto community.
However, despite initial expectations of a significant price increase, the bitcoin market has seen an 8% price drop since the ETFs began trading.
Will bitcoin ETFs develop their impact over time?
Drawing a comparison to the launch of the first Gold ETF, Howard Lutnick, CEO of Cantor Fitzgerald Asset Management, noted that the immediate rush to buy the asset did not materialize.
Lutnick notes that historical data from the launch of the gold ETF, SPDR Gold Shares (GLD), reveals that substantial price appreciation occurred over several years.
When the GLD was introduced in November 2004, the price of gold was around $700. By December 2023, it had risen to a level its highest point of $2,145. The capitalization of the gold market, estimated at between $1 and $2 trillion before the ETF's approval, skyrocketed to $16 trillion in just a few years.
Likewise, despite the initial hype around bitcoin spot ETFs, experts suggest that the true impact of these ETFs will play out over an extended period.
As reported According to NewsBTC, market analysts at CoinShares estimate that the United States holds around $14.4 trillion in addressable assets.
Assuming a conservative scenario where 10% of these assets are invested in a spot bitcoin ETF with an average allocation of 1%, it could generate inflows of approximately $14.4 billion over the first year.
These major inflows have the potential to push the price of bitcoin to new highs and start a notable bullish price trend. However, as predicted by Cantor CEO Howard Lutnick, the halving event, expected to occur in April, remains the main catalyst for bitcoin's growth.
Dual Catalysts for crypto Market Excitement
As bitcoin Halving Event Approaches, Analysis of Past Halvings btc-halvings/” target=”_blank” rel=”nofollow”>reveals a pattern of substantial rallies leading up to the event, followed by a brief period of correction and consolidation before a major confinement and a litle more. The peak usually occurs about 18 months after each halving, showing a consistent trend.
The first halving occurred on November 28, 2012, reducing the block reward from 50 btc to 25 btc. At the time of the halving, the price of bitcoin was around $13.
However, within a year, it reached a high of $1,152. Despite a subsequent price drop to nearly $200 in 2015, critics declared the bursting of a bubble and the demise of bitcoin. However, this trend would repeat itself in subsequent halving cycles.
The second halving occurred on July 16, 2016, reducing the block reward to 12.5 btc. At that time, bitcoin was valued at $664.
The following year a high of $17,760 was recorded. Similarly, the third halving occurred on May 11, 2020, reducing the block reward to 6.25 btc. bitcoin was priced at $9,734 during the halving and peaked in $69,000 Next year.
Based on historical cycles, it is evident that the next halving scheduled for April 2024 It will be a major catalyst for bitcoin. However, it is important to note that bitcoin ETFs will also play a crucial role.
These ETFs are expected to have a positive impact on the price of the cryptocurrency and generate new inflows and interest in the cryptocurrency market.
Featured image from Shutterstock, chart from TradingView.com
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