- BTC surged to $31,000 for the first time in over a year.
- The value of gold grew exponentially after the Spot ETF in 2003.
The world’s largest cryptocurrency, Bitcoin [BTC]briefly broke through $31,000 as market optimism continued to grow in the wake of multiple applications for a Spot Bitcoin Exchange-Traded Fund (ETF).
How much are 1,10,100 BTC worth today?
The move past $31,000 was the asset’s best performance in more than a year. The bullish rally started after BlackRock, the world’s largest asset manager, filed for an ETF that will directly track Bitcoin.
Since then, other TradFi players like WisdomTree and Invesco have also thrown their hats in the ring.
Interest from major institutional players bolstered hopes of a BTC bull run and changed market sentiment greed, which remained in neutral for the past month. This begs the question: What is it about Spot ETF that has raised traders’ hopes?
The golden example
The Bitcoin ETF allows buyers to invest in the king coin without purchasing the actual asset. Thus, they can escape the hassle of cryptocurrency exchanges and crypto wallets.
Thus, ETFs help bridge the gap between traditional financing and the assets in question. Let’s take the example of the precious metals market, specifically gold.
According to on-chain analytics firm IntoTheBlock, the launch of its Spot ETF in 2003 revolutionized gold trading. The fund made investing in the yellow metal hassle-free, resulting in a rapid rise in its value.
Attaching an excerpt from TradingView, IntoTheBlock highlighted that gold prices rose 27% in a year after launch, 172% in five years and almost 5x in ten years. This implied that the launch of ETFs played a vital role in attracting institutional funds.
Source: IntoTheBlock
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And while Bitcoin futures ETFs are already on the market, the application for Spot ETFs is more important. Spot ETFs, unlike futures ETFs, will be backed by real BTC, and the price of one stock on the exchange will react to the spot price of BTC, similar to holding a BTC.
Long positions for BTC spike
Bullish sentiment permeated the futures markets as traders positioning themselves for price gains outperformed those looking to profit from price losses. According to Coinglass, BTC’s long position rose to 51% of the total number of active positions in the market at the time of writing.
Source: Coinglass