ETF Approval During Recession
On the 7th, VanEck, a major US asset management company, released a 2024 forecast report for the crypto asset market. The report provides a detailed analysis of trends in the U.S. economy and the Bitcoin market, and predicts the pace of capital inflows to newly approved “Bitcoin spot ETFs” in the future.
VanEck estimates that in the first quarter of 2024, more than $2.4 billion could flow into Bitcoin spot ETFs, which are expected to be approved for listing by the U.S. SEC (Securities and Exchange Commission). .The basis for this prediction is that there is a high possibility that the U.S. economy will fall into recession in the first half of the same year, and that investors will be forced to turn to safe assets such as gold.
Based on historical data, Bitcoin experienced significant price fluctuations in 2020, when the coronavirus pandemic disrupted the global economy.
During the corona shock in March 2020, when the stock market and other financial markets crashed, Bitcoin (BTC) also fell by up to 60%. Due in part to the inflow of funds following the resumption of interest rate policy and quantitative easing, prices rapidly recovered during the rebound process.
Similarly, at the beginning of a market crash or economic recession, the price of gold tends to fall due to selling to avoid margin calls and increasing cash on hand, but there is a pattern of recovery after that. These examples suggest that Bitcoin may become an attractive option for investors in a time of heightened economic uncertainty.
Bitcoin spot ETFs, which may be newly approved in the first quarter of 2024, are attracting attention, and the market price is expected to be “unlikely to fall below $30,000,” but “market volatility may even increase,” VanEck added.
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Comparison with the launch of the first ever gold ETF
Additionally, the company uses the past trends of the first-ever gold ETF, the SPDR Gold Shares ETF (GLD), as a reference when predicting inflows into Bitcoin spot ETFs. The GLD ETF went public in November 2004, with approximately $1 billion in inflows within the first few days, and approximately $2.26 billion by the end of the first quarter of 2005.
Applying this example to the Bitcoin market and considering the modern financial market situation, we would expect capital inflows to Bitcoin ETFs to exceed the GLD case.
VanEck predicts that Bitcoin spot ETFs will see $40.4 billion in inflows in the two years after approval. This medium-term outlook is based on changes in financial markets and an increase in the money supply. In particular, there is an assumption that Bitcoin will establish itself as a safe-haven asset and take market share in competition with gold, which will increase interest in Bitcoin as a countermeasure against inflation risk.
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Fund inflow prediction compared to Bitcoin ETF and gold ETF
The newly approved Bitcoin ETF is expected to receive about $1 billion in inflows in the first few days of launch, and $2.4 billion in inflows in the quarter. This estimate is based on historical performance in financial products, particularly the SPDR Gold Share (GLD) ETF, which was launched in 2004.
The GLD ETF, which was launched on November 18, 2004, attracted approximately $1 billion within the first few days of its launch, and approximately $2.26 billion by the end of the first quarter of 2005. At the time, the physical supply of gold was approximately 152,000 tons, and the market capitalization was approximately $2.36 trillion. Against this backdrop, initial inflows into GLD represented approximately 0.04% of the total gold market, and after one quarter, they accounted for 0.1%.
Applying this analysis to the Bitcoin market, the new Bitcoin ETF is expected to receive $300 million in inflows in the first few days and $750 million in the quarter. However, given current financial market conditions, we believe that the inflows into the Bitcoin ETF will exceed the GLD case, which is the basis for the initial $1 billion and quarterly forecast of $2.4 billion in inflows. .
Bitcoin ETF fund inflow forecast over 2 years
According to VanEck, the medium-term outlook, which takes into account investor interest in new Bitcoin ETFs and financial market fluctuations, is that the ETF is expected to receive approximately $40.4 billion in inflows over two years. This estimate is based on the evolution of financial markets and trends in the money supply.
In 2004, during the economic downturn following the bursting of the dot-com bubble, the M2 money supply measured by the Federal Reserve Bank of New York was $6.4 trillion, but it has increased to $20.7 trillion by October 2023. This rapid increase in money supply is said to be increasing investor interest in Bitcoin ETFs and the potential for capital inflows. Applying this growth rate (3.23x) to the Bitcoin ETF, we would expect inflows of approximately $1 billion in the first few days and $2.4 billion in the quarter.
Additionally, once Bitcoin ETFs mature, VanEck points out that they could receive approximately $12.5 billion in inflows, representing approximately 1.7% of the total BTC spot market (similar to the total supply of gold held by gold ETFs). .
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Factors contributing to the increase in capital inflow to the Bitcoin market
VanEck also believes that concerns about debt-driven money printing will drive more capital into the Bitcoin market. In particular, it is assumed that Bitcoin will deprive gold of its status as a “safe-haven asset” and “store of value,” reaffirming its role as a hedge against inflation risks related to the money supply.
Applying a multiple of 3.23x based on M2 money stock, we calculate the medium-term estimated value of $40.4 billion over the two years from the start of trading.
Finally, the emergence of Bitcoin ETFs is expected to significantly lower fees in the spot trading market, making it easier to participate in the market. While the U.S. cryptocurrency exchange Coinbase charges general investors a 2.5% transaction fee, many securities companies charge zero commission or a spread of about 10bps (0.1%) for spot trading of Bitcoin ETFs. It is expected to be traded. It is believed that this significant cost reduction will further promote the spread of the new technology.

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