Three months ago, the GLD ETF was five times higher in value than GBTC. Gold just fell 7.5% in the last three months.
The analytical firm Ecoinometrics affirmed this March that the Grayscale bitcoin fund (GBTC) has been approaching the gold ETFs that exist in the United States in terms of the value of the respective assets managed (AUM). GBTC currently represents 62% of GLD, the largest gold ETF operating in that country, says Ecoinometrics.
The latest Ecoinometrics report on the bitcoin market aims at setting comparisons between Ecoinometrics and the size of the gold market. Due to the absence of a bitcoin exchange-traded fund (ETF) in the United States, GBTC is the closest option to an ETF that investors have, says Ecoinometrics.
In the latest comparison by Ecoinometrics, on December 23, 2020, the price of BTC was $ 23,000, and the value of GBTC’s assets was $ 14 billion. At that time, the GLD ETF assets reached $ 70 billion, five times the deal of GBTC.
In clear contrast with the progress of GBTC and the decline of the GLD ETF, Ecoinometrics claims that Grayscale’s bitcoin fund may eclipse the latter in managed value.
In other matters, Ecoinometrics differs in the market capitalization of bitcoin and the physical gold market due to the so-called financial gold market.
Is Bitcoin Too far Away from Gold?
The market capitalization of bitcoin is approximately 10% of the market for physical gold, estimated at 11 trillion dollars. Ecoinometrics, on the other hand, argues that bitcoin represents 42% of the financial gold market (USD 2.5 trillion), made up of all financial instruments that are under transactions on the stock exchange, as well after the track of the gold’s price.
Ecoinometrics also studies some reasons why the de-facto bitcoin ETF that GBTC represents fails to outperform GLD. Ecoinometrics points out that growth in US Treasury yields would fight against a significant rise in gold.
The report also says that the GBTC fund has grown in competition, even without a bitcoin ETF, the report says.
“There are no limits for Investors in GBTC in case they want to have long-term exposure to Bitcoin. MicroStrategy has a pseudo-ETF status, but a host of smaller public companies have BTC on their balance sheet and offer varying degrees of exposure for those interested.” Econoimetrics.
It is also relevant to consider that only GBTC represents 47% of total investments, with almost 650,000 BTCon hold. This last figure is higher than the total of 600,000 BTC that companies had invested in mid-October 2020.
Despite the GBTC fund’s prominence, the demand for shares had fallen recently, as the premium for such claims, which usually exceeded 20% of underlying BTC price per share, fell to -12% at the beginning of March.
The reasons for this sudden decline could be in the success of the bitcoin ETFs launched in Canada and the support that the application for a bitcoin ETF before the SEC, by Van Eck, has had.
By: Jenson Nuñez
