In a notable trend shift, while spot Bitcoin exchange-traded funds (ETFs) have been attracting significant inflows since their January launch, major gold-tracking ETFs are experiencing substantial outflows, amounting to $2.39 billion since the beginning of the year.
Bloomberg Senior Intelligence Analyst Eric Balchunas highlighted this divergence in investor sentiment, reporting that 14 of the world’s largest gold ETFs, some of which now offer spot Bitcoin ETFs, have witnessed a negative trend in their weekly flow notes.
Meanwhile it’s a pretty bad scene right now in the gold ETFs category… via @SirYappityyapp in our just published weekly flow note pic.twitter.com/C0T17JZpiA
— Eric Balchunas (@EricBalchunas) February 14, 2024
Among the gold ETFs, the top three funds experiencing the least outflows are VanEck Merk Gold Shares, FT Vest Gold Strategy Target Income ETF, and ProShares UltraShort Gold, with net flows of $16.1 million, $3.8 million and $1.4 million, respectively.
Balchunas expressed scepticism that investors leaving leading gold ETFs are necessarily migrating to Bitcoin ETFs. He suggested that even if some investors are making the shift, it would likely be minimal, and their actions might be influenced more by FOMO than a strategic move to embrace Bitcoin.
While gold ETFs have struggled in performance since the year’s commencement, data from BitMEX Research indicates that spot Bitcoin ETFs have seen a record-high total flow of $4.1 billion since receiving approval in the US. This divergence in investor preferences underscores a growing inclination toward Bitcoin as a favoured investment avenue over gold.
The decline in gold prices throughout 2024 further accentuates the disparity between the two assets. Gold recently hit a two-month low of $1,993 per ounce on February 14. In contrast, Bitcoin prices have surged by over 23.5% during the same period, reaching a two-year peak on the same day. MicroStrategy CEO Michael Saylor has also highlighted the surging demand for Bitcoin products, surpassing the available supply by a factor of ten. This shifting landscape indicates a changing landscape where Bitcoin gains favour as a preferred investment compared to traditional assets like gold.
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