{"id":3059140,"date":"2024-01-12T10:57:44","date_gmt":"2024-01-12T15:57:44","guid":{"rendered":"https:\/\/wordpress-1016567-4521551.cloudwaysapps.com\/plato-data\/gold-etfs-vs-bitcoin-etfs\/"},"modified":"2024-01-12T10:57:44","modified_gmt":"2024-01-12T15:57:44","slug":"gold-etfs-vs-bitcoin-etfs","status":"publish","type":"station","link":"https:\/\/platodata.io\/plato-data\/gold-etfs-vs-bitcoin-etfs\/","title":{"rendered":"Gold ETFs vs. Bitcoin ETFs"},"content":{"rendered":"

\"rows<\/p>\n

This week\u2019s approval of bitcoin ETFs is a milestone moment.<\/p>\n

I\u2019ve got to say, it felt pretty good. After years of proclaiming the virtues of investing a small amount of bitcoin into your portfolio, it\u2019s satisfying to know that every financial advisor will soon be recommending this strategy to their clients.<\/p>\n

In the words of a famous union leader<\/a>:
First, they ignore you, <\/em>
then they laugh at you, <\/em>
then they attack you, <\/em>
then they build monuments to you.<\/em><\/p>\n

I explained bitcoin ETFs in my Parable of the Bitcorn<\/a>, but to predict what might happen from here, let\u2019s look at the growth of a similar product: gold ETFs<\/em>.<\/p>\n

\"matt<\/p>\n

Gold ETFs: They Hold the Gold, So You Don\u2019t Have To<\/h2>\n

Investors have always loved gold. (Also, pirates.) Gold holds its value, because, you know, they\u2019re not making any more of it.<\/p>\n

But holding your own gold is a hassle. You\u2019ve got to find a reputable place to buy it, and a safe place to store it. You\u2019ve got to manually calculate its value. And like a Kardashian, you have to question its purity.<\/p>\n

The idea of a gold ETF was a breakthrough: rather than hiding coins under their bed, investors could just buy shares of a fund, just like buying shares of a company. The fund would hold the gold, so you wouldn\u2019t have to.<\/p>\n

The first true gold ETF launched in Australia in 2003, but the big one was SPDR Gold Shares<\/a>, which launched in the US in 2004. Demand was unprecedented, with 50 million shares trading on its first day. It crashed major trading platforms, who couldn\u2019t keep up with the volume.<\/p>\n

The price of gold saw a short-term bump, but it\u2019s the long-term results that we\u2019re interested in:<\/p>\n

\"20
Gold price, last 20 years (courtesy goldprice.org)<\/figcaption><\/figure>\n
\"market
SPDR Gold Trust ETF price, last 20 years (courtesy Google Finance)<\/figcaption><\/figure>\n

Gold ETFs became a $270 billion industry by 2023, with SPDR Gold Shares remaining the largest. It changed the game for gold.<\/p>\n

Bitcoin ETFs: We Hold the Coin, So You Don\u2019t Have To<\/h2>\n

The parallels between bitcoin and gold are striking. Indeed, people call bitcoin \u201cdigital gold,\u201d and talk about \u201cmining\u201d it. And they both work outside of the banking system<\/em>, which provides an extra layer of trust. (Governments can\u2019t print more gold.)<\/p>\n

Like gold, bitcoin is a hassle to buy and hold yourself. Private keys, cold wallets, risk of theft: most people have a hard enough time keeping their browser tabs<\/em> organized. Bitcoin is a black hole.<\/p>\n

As I\u2019ve said many times, the only way to grow bitcoin investing is to make it easier<\/em>. Exchanges like Coinbase and Binance were a big step forward, but they still required a separate account, so nothing was integrated \u2013 and you never knew when the SEC would sue them.<\/p>\n

Now, with bitcoin ETFs, it\u2019s a whole lot easier.<\/p>\n

You just buy shares of the ETFs, similar to buying shares of stock. The fund manager holds the bitcoin, so you don\u2019t have to. All your financial reporting is in one place. You can easily buy and sell online, without having to meet a sketchy bitcoin dealer in a dark alley.<\/p>\n

It\u2019s tempting to say that because gold and bitcoin are so similar, they will follow similar adoption and price trajectories. The truth is, we don\u2019t know. Bitcoin has defied expectations many times, so maybe it will behave differently.<\/p>\n

Also, gold ETFs had an advantage over bitcoin ETFs: everyone already understood the value of gold<\/em>.<\/p>\n

\"handsome
Even leprechauns. (Courtesy DALL-E)<\/figcaption><\/figure>\n

And So, We Continue to Educate<\/h2>\n

Many financial advisors, many portfolio managers, still don\u2019t understand bitcoin.<\/p>\n

However, now they have a new incentive to learn: commissions<\/em>.<\/p>\n

If you\u2019re a BlackRock advisor looking to diversify your client\u2019s portfolio, you might start recommending, say, up to five percent be put into the BlackRock bitcoin ETF.<\/p>\n

Which is, of course, exactly what we\u2019ve been saying all along.<\/p>\n

In fact, asset managers are already falling over themselves to offer the lowest fees, which is good news for all of us. (\u201cCue the fee wars<\/a>,\u201d proclaims the Wall Street Journal<\/em>.)<\/p>\n

This is why some people are predicting a torrent of money floods into bitcoin ETFs from both individual and institutional investors, driving up the price of BTC to $100,000<\/a>, or even $150,000<\/a>, by the end of the year.<\/p>\n

I think that\u2019s too fast, too soon.<\/p>\n

But in the next few years? Very possible.<\/p>\n

If you\u2019ve been following our steady-drip investing approach<\/a>, buying a bit of bitcoin each month regardless of price, as part of a balanced investment portfoio, congratulations! Our latest quarterly reports<\/a> show that you\u2019ve blown away the returns of ordinary investors.<\/p>\n

And if you haven\u2019t been following our approach, there\u2019s good news: it\u2019s never been easier to get started, because you can now do it all from one account<\/em>. Your stocks, bonds, and bitcoin ETF can all be purchased from any online broker.<\/p>\n

Our dream is one step closer to reality.<\/p>\n