November 18, 2004, marked an important date in investing history: the launch of the SPDR Gold Shares (GLD) exchange-traded fund (ETF).
The first-ever commodity ETF, it surpassed $1 billion in assets within its first three trading days.
And the gold price, which traded at roughly $443 when the ETF launched, rallied.
It hit $1,000 by early 2008. And today, gold trades above $2,000, over 350% higher from GLD’s launch date.
The ETF solved a key problem for investors: accessibility.
Before GLD, it wasn’t easy to invest in physical gold. You could buy gold coins or bars, but that meant going through a dealer.
That wasn’t a very efficient process. Nor was it always transparent. Liquidity was never guaranteed. And it was quite possible you could run into nefarious characters – like someone trying to sell you a counterfeit bar or coin.
And if you did manage to buy some gold coins or bars, then the problem became where to store it.
Do you risk storing it at your residence? Can you trust storing it at a bank? Or perhaps private storage, but at a high cost?
GLD solved those problems, and thus expanded access to the gold market for many U.S. clients who previously couldn’t easily acquire or store physical gold.
Today, the GLD ETF has holdings valued at around $57 billion. That’s the equivalent of 28 million ounces, or 880 tonnes of gold.
And it means the GLD ETF rivals central banks in holdings. If the GLD ETF were a country, it’d be in the top 10 in gold reserves.
Its success proves that ETFs are more than just trading vehicles, but foundational assets for portfolios.
Today, we’re on the cusp of an ETF launch that will be as revolutionary as the GLD ETF… the launch of a spot bitcoin ETF.
Like gold, bitcoin isn’t the easiest asset to acquire and store. It can be a clumsy and inefficient process.
There are concerns about hacks and scams. And the regulatory uncertainty keeps many from even considering the investment.
The launch of a spot bitcoin ETF will change all that.
For the first time ever, U.S. investors will have a cheap, easy, and familiar way to buy and store BTC. And in the future, even more cryptocurrencies.
And as we’ll show you, a spot bitcoin ETF will have a greater impact on the crypto market than the gold ETF had on the precious metals market.
A Spot Bitcoin ETF – It’s Finally Here
Yesterday, the Securities and Exchange Commission (SEC) approved proposals for 11 spot bitcoin ETFs.
The list includes Bitwise, Grayscale, Hashdex, BlackRock, Valkyrie, BZX, Invesco, VanEck, WisdomTree, Fidelity, and Franklin.
That means by the time you read this, these ETFs will already be trading.
Like we predicted, the SEC didn’t just approve one spot bitcoin ETF, but 11.
Combined, the 11 firms with bitcoin ETF approval have $17 trillion under management.
There’s no doubt a spot bitcoin ETF will be a huge win for the crypto asset class.
It will immediately give BTC legitimacy. There will be no more doubt that crypto is a new asset class.
It will also eliminate regulatory uncertainty.
After all, you’ll be able to buy BTC via an ETF issued by the likes of BlackRock or Fidelity and hold it in your Schwab or JPMorgan Chase account.
But perhaps the biggest benefit will simply be accessibility.
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You’ll be able to buy BTC in one click through your brokerage.
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You won’t have to worry about storage.
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You know it’s all legit.
On top of that, a spot bitcoin ETF taps into U.S. traditional finance, a massive opportunity.
Consider a recent survey from the Digital Asset Council of Financial Professionals.
It found only 12% of financial advisers currently recommend bitcoin to clients. But 77% say they plan to do so if and when a U.S. spot bitcoin ETF becomes available.
To us, that demonstrates the importance of regulatory certainty and accessibility.
And let’s not forget the importance of the ETF as a vehicle for investment.
Asset managers, banks, and registered investment advisers collectively manage over $48 trillion in assets.
For perspective, BTC’s market cap sits around $890 billion. And the entire crypto market is less than $2 trillion.
So just a small percentage of assets moving to BTC, which doesn’t even consider new flows, would have an outsized impact.
Now, the clear and obvious beneficiary to the approval of spot bitcoin ETF is BTC.
It’s likely approval of a spot bitcoin ETF would take the BTC price back toward its all-time high near $70,000.
As a comparison, the gold price went up 14% in the year after the GLD ETF launch in November 2004. And by the end of 2007, it had more than doubled to roughly $900.
But in our view, the biggest winners will come from a subsector of altcoins that very few people know about.
You see, GLD paved the way for the rest of the commodity sector. Soon there were ETFs for silver, copper, platinum, and more.
Today, there’s nearly 100 commodity-based ETFs, with over $132 billion in assets under management. We think we’ll see a similar pattern in cryptos…
The Next Target for an ETF
After bitcoin, the most likely candidate to get a spot ETF is Ethereum (ETH).
For instance, BlackRock has already filed to launch an ETF for ETH, the second largest crypto by market cap behind bitcoin.
But there’s a niche corner of the crypto market we believe will be next up for their own ETFs. We call them “crypto reward” tokens.
You see, many crypto projects pay out rewards. It’s similar to the way a stock pays a dividend. Instead of receiving cash, though, you receive more of the underlying crypto.
Essentially, you can get paid for backing the disruptive technology that a crypto is developing.
So our goal is to not just identify tokens that will appreciate in value… But also look for ones that pay out these incredible rewards.
That’s because they offer early adopters the potential for the highest rewards. And we’ve seen this firsthand…
For example, when we took a position in one of my earliest crypto payment tokens in September 2019, it had a reward rate of roughly 7.5% annually.
But the price of this token has grown. And so have the value of the rewards.
Today, the effective reward rate of 42%. At this rate, anyone who followed my initial recommendation would recoup their whole investment in less than three years.
Because of their higher yields, we believe these tokens are the ones Wall Street firms will most likely launch new ETFs for.
Wall Street already has 168 dividend ETFs, with more than $380 billion in assets under management. So we believe it’s going to replicate that with cryptos.
Now, this subsector of the crypto market that accounts for less than 1% of all coins. So for 99.99% of people, this is a brand-new way to invest in cryptos.
So you don’t want to dive into these tokens in without understanding them first…
That’s why Daily editor Teeka Tiwari recently held a special briefing on these types of tokens. He believes they’ll help you reach your Freedom Number.
Your Freedom Number is simply the amount of money you need to make to live the life you want.
And because these types of tokens can generate incredible income on top of capital gains – they can help put you on the path to financial freedom.
During his special briefing, Teeka shared details about six tokens with these automatic payouts that we believe will get their own ETFs after bitcoin.
You can stream the replay here.
If your goal is to hit your Freedom Number in 2024, you must act now before the rest of the crowd. If you wait until long after a spot bitcoin ETF gets approval, it’ll be too late.
Regards,
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Greg Wilson
Analyst, Palm Beach Daily