Bitcoin’s Spot ETF: Will BTC Mimic Gold’s 2004 Price Surge? Analyst Weighs In

Samuel Edyme

1 year ago

3 mins read

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A fresh perspective on Bitcoin has recently surfaced courtesy of prominent crypto enthusiast and YouTuber Lark Davis. Davis offers an interesting parallel between Bitcoin’s potential fate and gold’s historical performance, especially spotlighting the transformative year of 2004 for the latter.

Reflecting on gold’s journey in the early 2000s, a period marked by the introduction of a gold Exchange Traded Fund (ETF), Lark Davis suggests that Bitcoin may be on the brink of a similar breakout. While this is a bold claim, its rationale, centered on the anticipated launch of a Bitcoin spot exchange-traded fund (ETF), warrants a closer look.

Gold’s 2004 Surge: A Prelude To Bitcoin’s Future?

2004 was transformative for gold, with its price trajectory reflecting a notable paradigm shift. The catalyst for this change was the launch of the first gold ETF – SPDR Gold Shares (NYSE: GLD) by State Street Corporation.

A chart shared by Davis vividly encapsulates this: the price of gold began its ascent from a modest $400 per ounce towards the end of 2004 and reached a pinnacle of $1,939 by 2011.

A chart showing gold's spike following its ETF launch in 2004. — A chart showing gold’s spike following its ETF launch in 2004. | Source: Lark Davis

Although a decline to $1,184 followed this meteoric rise, the overall trend showcased the profound impact of ETFs on asset prices. If history were to serve as a guide, Davis’s analogy suggests Bitcoin might follow a similar path.

A potential Bitcoin spot ETF could usher in a flurry of new investments, changing the market’s supply and demand dynamics.

As Davis showed from the gold example, introducing such an ETF for Bitcoin could potentially attract between $20 billion and $30 billion. Assuming today’s prices, this would be equivalent to newcomers snapping up approximately half of the available Bitcoin on exchanges.

Estimates are that a spot Bitcoin ETF would bring 20-30 billion of fresh cash into Bitcoin. That would buy about half of all coins on exchanges at current prices.

For reference here is what happened to gold when it got its first ETF approved on US markets.

History repeating? pic.twitter.com/CBNvZgMq18

— Lark Davis (@TheCryptoLark) September 4, 2023

‘Supply And Demand Don’t Lie’

While Davis’s projection is rooted in past trends, it’s crucial to understand the broader dynamics at play. His assertion that “supply and demand don’t lie” underlines the fundamental economic principle that when demand exceeds supply, prices generally rise.

The launch of a Bitcoin ETF would invariably boost demand by offering a more accessible and regulated way for investors to gain exposure to Bitcoin without owning the underlying asset directly. This surge in demand and Bitcoin’s capped supply might push prices higher, just as it did for gold in 2004.

However, as with all financial forecasts, there’s a degree of speculation involved. While the parallel between gold’s 2004 trajectory and Bitcoin’s potential future is compelling, only time will reveal the actual course of events.

Despite this forecast, Bitcoin has seen a slight dip over the past 24 hours, with a current market price of $25,867, at the time of writing.

Bitcoin (BTC) price chart on TradingView — Bitcoin (BTC) price is moving sideways on the 4-hour chart. Source: BTC/USDT on TradingView.com

Featured image from iStock, Chart from TradingView

Samuel Edyme

Meet Samuel Edyme, Nickname - HIM-buktu. A web3 content writer, journalist, and aspiring trader, Edyme is as versatile as they come. With a knack for words and a nose for trends, he has penned pieces for numerous industry player, including AMBCrypto, Blockchain.News, and Blockchain Reporter, among others.

Edyme’s foray into the crypto universe is nothing short of cinematic. His journey began not with a triumphant investment, but with a scam. Yes, a Ponzi scheme that used crypto as payment roped him in. Rather than retreating, he emerged wiser and more determined, channeling his experience into over three years of insightful market analysis.

Before becoming the voice of reason in the crypto space, Edyme was the quintessential crypto degen. He aped into anything that promised a quick buck, anything ape-able, learning the ropes the hard way. These hands-on experience through major market events—like the Terra Luna crash, the wave of bankruptcies in crypto firms, the notorious FTX collapse, and even CZ’s arrest—has honed his keen sense of market dynamics.

When he isn’t crafting engaging crypto content, you’ll find Edyme backtesting charts, studying both forex and synthetic indices. His dedication to mastering the art of trading is as relentless as his pursuit of the next big story. Away from his screens, he can be found in the gym, airpods in, working out and listening to his favorite artist, NF. Or maybe he’s catching some Z’s or scrolling through Elon Musk’s very own X platform—(oops, another screen activity, my bad…)

Well, being an introvert, Edyme thrives in the digital realm, preferring online interaction over offline encounters—(don’t judge, that’s just how he is built). His determination is quite unwavering to be honest, and he embodies the philosophy of continuous improvement, or “kaizen,” striving to be 1% better every day. His mantras, “God knows best” and “Everything is still on track,” reflect his resilient outlook and how he lives his life.

In a nutshell, Samuel Edyme was born efficient, driven by ambition, and perhaps a touch fierce. He’s neither artistic nor unrealistic, and certainly not chauvinistic. Think of him as Bruce Willis in a train wreck—unflappable. Edyme is like trading in your car for a jet—bold. He’s the guy who’d ask his boss for a pay cut just to prove a point—(uhhh…). He is like watching your kid take his first steps. Imagine Bill Gates struggling with rent—okay, maybe that’s a stretch, but you get the idea, yeah. Unbelievable? Yes. Inconceivable? Perhaps.

Edyme sees himself as a fairly reasonable guy, albeit a bit stubborn. Normal to you is not to him. He is not the one to take the easy road, and why would he? That’s just not the way he roll. He has these favorite lyrics from NF’s “Clouds” that resonate deeply with him: “What you think's probably unfeasible, I've done already a hundredfold.”

PS—Edyme is HIM. HIM-buktu. Him-mulation. Him-Kardashian. Himon and Pumba. He even had his DNA tested, and guess what? He’s 100% Him-alayan. Screw it, he ate the opp.

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