Bitcoin's price may be more predictable than you think

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The loudest trade in Bitcoin right now is a bet that the price taps $72,000 by the time the Fed meets next week. Options desks are lit up, with everyone staring down that number. 

But Eric Balchunas, Bloomberg Intelligence ETF expert, has his eyes set on something else. He took a deep dive into what has happened over the past 22 years to gold exchange-traded funds and how that mirrors what’s in store for Bitcoin. 

His argument is simple. Gold ETFs and Bitcoin ETFs are the same species. They are wrappers around an asset that earns nothing, pays no coupon, and has no government standing behind it. With no cash flow to anchor them, only one thing sets the price: how much investors want it. 

That makes both prone to the same rhythm. We’re talking spectacular runups, brutal drawdowns, and slow recoveries that test everyone’s patience.

“The good news though: each cycle for gold ETFs has increased the high water mark,” Balchunas wrote on X. “Two steps forward, one step back.”

Bitcoin trades at around $66,000, up nearly 6% over the past week.

Assets in GLD, the biggest gold ETF, went from $76 billion to $22 billion to $84 billion to $48 billion. These days assets under management sit near $190 billion. Boom, bust, boom, bust, boom. 

But here’s the part that should stay with you. For one day in 2011, GLD was briefly the largest ETF in the world, even larger than the SPY. Then it fell out of favor and spent the next eight years clawing its way back.

Sound familiar? 

IBIT, BlackRock’s Bitcoin fund, crossed $100 billion in assets for a few hours late last year. That afternoon turned out to be the October top from last year.

To be sure, Balchunas was careful to hedge it, and so are we. Gold’s price performance is by no means a guarantee. Demand for these assets is fickle and arrives in waves. So gold offers a useful roadmap, but it’s certainly not set in stone that Bitcoin will follow. 

Still, the lesson is that you don’t need to be 100% right to have a useful predictive framework.

For the people who were still holding, each gold cycle ended higher. “Two steps forward, one step back” only compounds if you don’t get shaken out on the step back. The investors who captured gold’s 22-year climb weren’t the ones who called the peaks.

They were the ones who treated the eight-year bottom as the price of admission.

Which makes the question for Bitcoin the same one we come back to every week. It’s not about how high it will go, but whether you’ll still be holding through the stretches that test your patience.

If you clicked anything but the first, then jump onto Rhino to see what “planned for it” looks like in practice:

I'll chat to you next week,

Hector