Could Bitcoin ETF Hype Be Overdrawn?

Recently, JPMorgan Chase issued a point of view: the hype of Bitcoin ETF may be overdrawn, and the "halving" is also priced in.

We know that the price of Bitcoin in recent months has been basically driven by ETFs, and the sentiment in the crypto market has also been influenced by ETFs. Bitcoin has more than doubled since the beginning of the year. Is this increase already "overdrawn" as JP Morgan said, and has it priced in next year's "halving" market? Will the future impact of ETFs on the crypto market be as dramatic as most people expect?

Before explaining this issue, Houshanke will take you to look at the past gold market and the impact of its ETFs. The trend of gold from 1990 to the present: In the past 30 years, there have been many major events around the world, especially several major crises in the financial market, such as the 1998 Southeast Asian financial crisis, the bursting of the US Internet bubble in 2000, the 2008 financial tsunami, and the 2020 financial crisis. epidemic panic, etc.

When these crises occurred, the global stock market, real estate, commodity and other markets all experienced "crash-like" slumps. We can see that even gold, as a safe-haven asset, fell even during the crisis, but the decline was not significant. From here we can also see that so-called safe-haven assets will not fall much when a crisis occurs, but they will not rise sharply either.

Think about it again, there were even some local wars during this period. Did gold rise very much? Not big, right? The real sharp rise in gold came from the monetary expansion during the economic boom from 2003 to 2007 and the monetary quantitative easing adopted by the Federal Reserve to rescue the market after the 2008 financial tsunami.

In other words, the real big rises all come from currency releases.

Bitcoin’s current market value and consensus are not enough to be compared with gold. From the perspective of the macro environment, the global economy may continue to decline for a long time to come, and it is unrealistic to expect economic prosperity to drive monetary expansion. Now the Federal Reserve is raising interest rates, shrinking its balance sheet, and tightening money in an "unprecedented" manner, so there is less and less money in the market.

The pressure of a possible economic recession will force the Federal Reserve to cut interest rates, which may not be until the second half of 2024. We can't expect a massive currency outflow for the time being.Let’s look at it from the perspective of gold ETFs. The U.S. gold ETF was approved by the SEC in late October 2004 and began trading in November 2004. However, the world’s first gold ETF was actually approved by Australia in 2003.

Gold did rise before and after the ETF was passed, but the increase was "not big". Was this increase caused by the listing of the ETF, or was it caused by the global economy beginning to prosper in the early 2000s (when China joined the WTO)? It’s hard to say.

Let’s return to the Bitcoin ETF. What the market is looking forward to is the approval of the US ETF. Just like the gold ETF was first listed in Australia, the Bitcoin spot ETF was approved for listing by Canada, Germany and some European countries in the past few years. However, investors seem to have "little interest".

So after the approval of the U.S. Bitcoin ETF, can it really bring in a larger amount of funds than expected? From the above description, we can see that big market trends require currency releases, while ETFs may only bring small market trends. In the context of an uncertain macroeconomic environment and suppression by the Federal Reserve's high interest rates, funds may be more concerned about the stability and security of their finances rather than chasing risky assets. Therefore, JPMorgan Chase’s statement that the price of BTC is overdrawn also makes sense.