Bitcoin ETF Inflows Overshadow Gold ETFs, BTC To Eclipse Gold Market Cap?

Since the introduction of new Spot Bitcoin ETFs, which were partly touted as a modern alternative to gold investment, there has been a significant shift in investor behavior. While billions flowed into Bitcoin ETFs since their launch on January 11, a substantial amount of money has exited gold ETFs.

Bitcoin ETFs Overshadow Gold ETFs

The top two gold ETFs by assets under management, SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), have witnessed net outflows. GLD, starting 2024 with $58 billion in AUM, and IAU, with $26 billion, have both experienced this trend. The outflows from gold ETFs intensified following the introduction of the 10 Spot Bitcoin ETFs.

The Bitcoin ETFs have attracted massive inflows, with the two largest accumulating nearly $10 billion in assets under management just over a month after their launch. In the last week, i.e., from February 18 to February 23, Spot Bitcoin ETFs registered $777.79 million inflows despite the significant outflows later in the week. Whilst, gold ETFs recorded $608.24 million net outflows, further adding to the massive outflows year-to-date.

However, this doesn’t necessarily imply a direct migration of funds from gold to Bitcoin. During the period from January 11 to February 14, investors withdrew approximately $2.6 billion from GLD and about $507 million from IAU. This stands in stark contrast to the previous year when both funds experienced solid inflows.

Out of the 14 gold ETFs analyzed on ETF.com, 11 have observed net outflows since the beginning of the year. Moreover, since the beginning of the year, gold ETFs have registered massive outflows of $3.6 billion, according to ETF.com.

The two leading new Spot Bitcoin ETFs, BlackRock’s IBIT and Fidelity’s FBTC, excluding Grayscale’s GBTC, which already existed as a closed-end fund, have collectively amassed nearly $10 billion in assets under management since their debut in January. When factoring in outflows from GBTC, the Spot ETFs as a whole have seen over $5 billion in net inflows.

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Will Bitcoin Eclipse Gold’s Market Cap?

Crypto analysts are optimistic about Bitcoin’s performance in the future as they expect it to eclipse the gold market cap, mirroring the approach toward silver. The Spot Bitcoin ETF issuer Fidelity’s Director of Global Macro, Jurrien Timmer, has projected a massive expansion in the Bitcoin market cap. Timmer envisions it to reach a remarkable $6 trillion, which is a quarter of the value of the “monetary gold” market.

In his analysis, Timmer draws a comparison between the segment of gold used for monetary purposes, estimated at 40% of the total above-ground gold reserves, and the potential market capitalization of Bitcoin. He pointed out that the monetary gold, excluding its use in jewelry or industries, is presently valued at approximately $6 trillion. Hence, if the Bitcoin price surges as the crypto attains a $6 trillion market valuation, it would be a significant milestone in comparison to monetary gold.

Meanwhile, the renowned Bitcoin analyst PlanB, recognized for his stock-to-flow model for BTC, has put forth a bold forecast concerning the future price trajectory of BTC. According to PlanB’s recent analysis, he anticipates a substantial surge in Bitcoin’s value over the coming years, drawing parallels with gold. Currently, he notes that one Bitcoin is equivalent to 26 ounces of gold, valuing an ounce of gold at $2,000.

Looking forward to 2024-2025, PlanB predicts a remarkable uptick in Bitcoin’s price to around 100 gold ounces, translating to $200,000. Furthermore, PlanB envisions Bitcoin climbing to 35 gold ounces, approximately $70,000 by 2024 and soaring to 300 gold ounces by 2025 or $600,000. This indicates a BTC market cap of $12 trillion, much closer to gold’s market valuation of over $13 trillion.

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