March 27, 2024
Bitcoin ETFs Surge as Gold ETFs Face $2.4 Billion in Outflows
Bitcoin ETF

Bitcoin ETFs Surge as Gold ETFs Face $2.4 Billion in Outflows

In the ever-evolving landscape of investment, a stark divergence has emerged between traditional safe-haven assets and their digital counterparts. Amidst economic uncertainty and shifting investor sentiments, gold-tracking exchange-traded funds (ETFs) have witnessed staggering outflows, while ETFs tied to the spot price of Bitcoin have experienced record-breaking inflows.

According to a recent report by Bloomberg intelligence analyst Eric Balchunas, the 14 leading gold ETFs have collectively suffered outflows totaling $2.4 billion since the onset of 2024. Notable among these are BlackRock’s iShares Gold Trust Micro and iShares Gold Trust, which have seen substantial exits amounting to $230.4 million and $423.6 million, respectively. Only a handful, including VanEck Merk Gold Shares, FT Vest Gold Strategy Target Income ETF, and Proshares UltraShort Gold, have managed to maintain minor inflows.

In contrast, the 10 approved spot Bitcoin ETFs have enjoyed remarkable success, with aggregate inflows reaching $3.89 billion since their launch on January 11th. This surge in popularity has been accompanied by record trading volumes, signaling a growing appetite for exposure to digital assets among investors.

Portfolio manager Bitcoin Munger remarked on the trend, noting, “Not only is Bitcoin sucking up funds, but gold is hemorrhaging AUM at an alarming rate across many ETFs.” However, Balchunas offered a different perspective, suggesting that the shift may be driven more by “US equity FOMO” rather than a direct migration from gold to Bitcoin.

The disparity between the two assets has been accentuated by contrasting price movements in 2024. While gold prices have dipped by 3.4% since the year’s commencement, reaching a two-month low of $1,993 per ounce on February 14th, Bitcoin has surged by 23.5%, reaching a two-year high of $52,483 on the same date.

Commenting on the factors influencing gold’s lackluster performance, the World Gold Council cited global ETF outflows and a reduction in speculative positioning, alongside headwinds from long-term Treasuries and the strengthening US dollar amidst positive economic surprises.

The divergence in performance comes as a surprise to some analysts, including Bloomberg senior commodity strategist Mike McGlone, who had earlier predicted gold to outperform Bitcoin in 2024.

Bitcoin and gold, both considered store-of-value assets and havens during economic and geopolitical uncertainty, have long been subjects of comparison. Yet, the current market dynamics suggest a shifting preference among investors, with Bitcoin emerging as a formidable contender in the realm of safe-haven investments.

As markets continue to navigate through uncertain waters, the contrasting fortunes of gold and Bitcoin ETFs serve as a testament to the evolving landscape of investment preferences, driven by technological innovation and changing market dynamics.

Image: Wallpapers.com

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