Original author: BEN STRACK

Original compilation: Deep Chao TechFlow

Introduction

Bitcoin ETFs have attracted significant inflows recently, while gold funds have shown outflows. While some analysts believe this outflow trend is unlikely to last, industry observers note that Bitcoin fund assets could one day exceed the $90 billion gold ETF market. This article will explore fund flow trends between Bitcoin ETFs and gold ETFs, and whether Bitcoin is expected to surpass gold in asset size.

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As Bitcoin ETFs continue to attract inflows six weeks after their launch, there is a trend of investor capital flowing out of gold funds, although some believe this inflow relationship is unlikely to last.

While analysts expect Bitcoin ETF assets could one day exceed those within gold funds, industry observers note that the two areas are not directly related.

Since their listing on January 11, the 10 spot Bitcoin ETFs have so far seen net inflows of approximately $5.5 billion.

Meanwhile, since then the largest gold ETFs, State Street Global Advisors SPDR Gold Shares (GLD) and BlackRocks iShares Gold, have Trust (IAU) suffered net outflows of approximately $2.7 billion and $350 million, respectively.

Click here to read more:To gauge the impact of Bitcoin spot ETFs, analysts look to gold。

Bloomberg Intelligence analysts Eric Balchunas and Andre Yapp said: “While gold cash may rarely enter Bitcoin ETFs, their presence and the surrounding new funds Enthusiasm for (in many ways, the most successful launch in history) increased competition for gold”.

Interest in a U.S. spot bitcoin ETF drove the cryptocurrency investment product to a fourth straight week of net inflows, CoinShares data showed. Although Grayscale Investments Bitcoin Trust ETF (GBTC) saw another week of outflows, amounting to approximately $430 million, the category still recorded net inflows of $598 million last week.

Click here to read more:Bitcoin ETF volumes surge after record week of crypto inflows

Are Gold and Bitcoin Flows Directly Correlated?

Bryan Armor, director of research for passive strategies at Morningstar, said he was not yet willing to directly link flows in Bitcoin ETFs and gold ETFs. The two assets represent distinct investments, he added.

“Gold may see outflows due to changes in interest rate cut expectations or the market shifting further into risk mode, reasons consistent with how investors have traditionally used gold in their portfolios,” Armor mentioned.

If market risks increase, I would expect the flow trend to reverse, he added. “A bear market may cause investors to move to quality assets and investors to become risk-averse, which will harm Bitcoin inflows.”

Fineqia International research analyst Matteo Greco said he expects the opposing flow trends between Bitcoin funds and gold to eventually cease in the long term.

He noted that while some investors view Bitcoin as digital gold and therefore choose to move funds from gold ETFs to Bitcoin ETFs, gold remains a safe-haven asset for many investors.

Greco said: “I foresee this trend will gradually slow down over time, gold will maintain its respected status, and in the long term, Bitcoin will attract more and more investment and recognition, and I even more Many view this as a net inflow into Bitcoin ETFs rather than a conversion from gold to BTC.”

Will a Bitcoin ETF have more assets than a gold fund?

Although GBTC has seen outflows of more than $7.4 billion since converting to an ETF, it remains the largest in the category with nearly $22.8 billion in assets under management.

BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) have assets of approximately $6.6 billion and $4.7 billion respectively.

To date, Bitcoin ETFs have nearly $38 billion in assets under management. Meanwhile, total gold ETF assets exceed $90 billion, with GLD and IAU accounting for approximately $54 billion and $25 billion respectively.

Greco noted that it took several years for gold ETFs to attract similar levels of flows to spot Bitcoin ETFs. After the long-awaited Bitcoin ETF received regulatory approval, the funds are off to a historic start, with assets at both IBIT and FBTC growing to over $3 billion a month after launch. GLD only surpassed the $1 billion asset mark within its first 30 days of trading.

Greco said that as digitization and tokenization are expected to become more common, Bitcoin ETF assets may eventually exceed those in gold funds.

“Without an ETF, traditional financial investors would not be able to directly invest in BTC, so the impact of this product could be more transformative than what was witnessed when the first gold ETF was approved in 2004,” he said.

Balchunas said in an X post that assets under management of Bitcoin ETFs are likely to exceed those of gold funds within two years. But a Bitcoin ETF with more assets than a gold ETF could be “in the distant future.”

“I expect inflows into Bitcoin ETFs to continue to be positive and Bitcoin to gain ground, but reaching the $90 billion in assets of gold ETFs will require broader adoption and continued strong performance from Bitcoin ETFs,” he noted.