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VanEck Adviser Says Spot Bitcoin ETF Impact is Overestimated Despite Long-Term Gains

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VanEck adviser Gabor Gurbacks pointed out that the hype of a Bitcoin (BTC) spot ETF in the market could be overestimated in terms of short-term inflows but could see long-term gains as the window widens.

In a Jan 1 post, Gurbacks wrote on X (formerly Twitter) that people have overstated the impact of a spot BTC ETF in recent months predicting limited inflows at first before a subsequent surge in inflows.

According to him, only $100 million coming from mostly recycled funds from institutional investors could find its way to the market after the Securities and Exchange Commission (SEC) approves an ETF.

In my view, people tend to overestimate the initial impact of U.S. Bitcoin ETFs. I think maybe a few $100mm flows (mostly recycled) money.

Long term, people tend to underestimate the impact of spot Bitcoin ETFs. If history is any guide, gold is worth studying as a parallel.

— Gabor Gurbacs (@gaborgurbacs) December 31, 2023

However, in the long run, the drive by institutional investors will see staggering inflows in the market with the analysts using the past statistics of gold as a benchmark to predict the market.

A golden case study

Going by the renowned gold analysis, bullish sentiment is justified in the sector as trillions are expected although the precious metal has a higher market capitalization before the introduction of the SDPR (State Street) ETF (GLD) in Nov 18, 2024.

After the gold ETF was rolled out, the orbit of the asset quadrupled from $400 to $1,800 with its market capitalization surging by $8 trillion from $2 trillion. To $10 trillion.

Similarly, Bitcoin stands in pole position with a market hovering around $750 billion. However, behind gold’s position at the time, if estimates are precise, the coming years could see trillions in the market, and in Gurback’s view, the subsequent might be faster.

“I also believe that only a few $10 Billion will come from Bitcoin ETP adoption and it won’t come all at once… but given 1) a relatively low Bitcoin float (strong hands/long-term holders) and 2) systematic scarcity via halving schedules that boost will be significant.”

He noted that most industry participants have hyped the projected growth while losing sight of the wider possibilities. Bitcoin will create its capital market surge beyond ETFs in the coming months. A major argument has been the credibility an ETF will bring to the assets among institutional investors.

Gurbacks sees more opportunities in state sovereign funds, institutional funds directly affecting the market as was recorded with gold.

More hype into the new year

In weeks leading up to the new year, cryptocurrencies particularly Bitcoin notched inflows boosting the overall market cap and assets under management (AUM) on the back of a potential spot BTC ETF approval.

The narrative that shaped the crypto narrative for most of the year dragged the market to new highs not seen in months as wealth funds and other investors increased their exposure to Bitcoin.

Last year, Bitcoin investment products recorded inflows of $1.6 billion while AUM soared over $36 billion. Several analysts predicted an ETF approval could bring trillions into the market massively affecting the asset’s price.

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