The first gold ETF in the world launched in 2003 and in the decade that followed, the asset burst onto the investment scene and shot up at price? Will Bitcoin follow this path?
Gold has become one of the world’s top assets, with most investors viewing it as one of the greatest stores of value. However, it wasn’t always like this. One of the major turning points for the precious metal was in 2003 when the first-ever gold ETF launched in Australia. In the decade that would follow, gold would burst onto the scene and cement its position as one of the world’s top assets. Will Bitcoin follow a similar path once an ETF in the U.S launches?
The first gold ETF was the Gold Bullion Securities which launched on March 28, 2003, on the Australian Stock Exchange. In the few years that would follow, the investment product would become quite popular, finally making its way to the U.S a year later. State Street, the second-oldest American bank, launched its own gold ETF in 2004. In just its first three trading days, it had surpassed $1 billion in assets. Since then, gold ETFs have become one of the most basic investment products.
Will the same happen with Bitcoin once the first ETF launches in the U.S market? Crypto influencer, YouTuber, and trader Lark Davis believes it will. He recently took to Twitter to tout the power that an ETF holds, predicting that Bitcoin will shoot into the mainstream scene upon the launch of an ETF, much in the same way gold did.
Before the first ETF, gold was trading at $332 an ounce. In the decade that would follow, it shot up to $1,600 an ounce, with the ETF playing a major part.
The Magic of an ETF
The first Bitcoin ETF in the American market was launched in Canada just over a month ago. A product of Purpose Investments Inc., the ETF quickly garnered the interest of investors, recording $80 million in just the first hour of trading. As ZyCrypto recently reported, the ETF has since surpassed $1 billion, proof of investors’ high interest.
So, why does an ETF garner such high interest? Peter Grandich, a Wall Street veteran explained why the gold ETF was such a hit, stating, “The gold ETFs were major successes because they not only brought a wealth of new investors to the gold market who otherwise may have not allocated funds in this arena, they clearly enhanced the demand in the physical market.”
Indeed, the demand for physical gold shot up once the ETF market for the product launched. Gold ETFs would go on to rival most central banks’ ownership of physical gold, at one point owning more than the French and Italian central banks.
For Bitcoin, such high demand would be a godsend. Already, we have seen what high demand can do to the price. One of the major catalysts was institutional BTC interest in the current bull run, with Wall Street gobbling up billions of dollars worth of the crypto. This created higher demand and eventually, the price reacted.
ETFs also make it easy to invest in an asset, even without prior experience. When gold ETFs sprang, they attracted millions of novice investors globally who had always wanted to invest in the asset.
However, at the time, investing in gold was tedious as one had to acquire it physically. And while investing in Bitcoin even without the ETF is easier than it was with gold, an ETF would still go a long way.