The rise of Bitcoin ETFs in the investment world has been nothing short of remarkable, with analysts at Bloomberg suggesting that they could soon outpace gold ETFs in terms of assets under management. According to Bloomberg ETF analyst Eric Balchunas, Gold ETFs have been experiencing a decline in recent weeks while Bitcoin ETFs have seen significant inflows, totaling over $8 billion since their launch just six weeks ago. This influx of funds has positioned Bitcoin ETFs to potentially overtake gold ETFs in size within the next two years.
As of Friday, Bitcoin ETFs held a total of $37.3 billion in assets, whereas gold ETFs, predominantly held by the SPDR Gold Shares (GLD) fund, had around $88 billion. The decline in gold ETF assets, amounting to $3.6 billion in net outflows since January 11, has been attributed to the stagnant performance of gold prices compared to the surging value of Bitcoin. With Bitcoin reaching new highs above $53,500 per coin, the competition between the two assets has intensified.
Balchunas anticipates that the competition from Bitcoin ETFs could further erode the assets under management of gold ETFs, which currently stand at $90 billion. The relatively stable price of gold around $2000 per ounce, contrasted with the 28% increase in Bitcoin’s value, has made the latter a more attractive investment option. This trend has raised concerns for gold ETF providers, such as BlackRock, who stand to lose revenue as investors flock to Bitcoin ETFs.
The Future of Bitcoin ETFs
Despite the recent slowdown in ETF inflows, analysts predict that Bitcoin could reach over $150,000 in value within the next 12 to 24 months. This projected growth would not only boost the assets under management of existing Bitcoin ETFs but also position Bitcoin as the largest commodity ETF. The attractiveness of Bitcoin as a hedge against inflation and currency debasement has further fueled its rise in popularity among investors.
The emergence of Bitcoin ETFs as a formidable alternative to gold ETFs underscores the changing landscape of the investment market. With the potential for Bitcoin to surpass gold in terms of assets under management, traditional asset managers must adapt to this shifting trend to remain competitive in the ever-evolving financial ecosystem.