Bitcoin ETFs Can Overtake Gold ETFs This Summer If This Happens

Bitcoin and Gold are once again in the limelight as both asset classes hit fresh all-time highs on Tuesday, March 5. On the other hand, the massive inflows into spot Bitcoin ETFs continue with daily trading volume skyrocketing all the way to over $10 billion.

Bitcoin ETFs vs Gold ETFs

Bloomberg’s Senior ETF strategist Eric Balchunas highlights the impact of massive inflows into Bitcoin ETFs in a very short time of their launch. In a groundbreaking development within the cryptocurrency market, the ten spot Bitcoin Exchange-Traded Funds (ETFs) have surged past the $50 billion mark in assets.

This monumental achievement comes just seven weeks after the ETFs were introduced, initially launching with under $30 billion in assets. Approximately $8 billion of the total assets are attributed to investor flows, with the remainder stemming from the appreciating value of Bitcoin itself.

Balchunas added that if these ETFs maintain their current momentum, adding $10 billion in assets per month—a prospect deemed both extraordinary and plausible, depending upon Bitcoin’s price trajectory—they could potentially surpass the assets under management of gold ETFs by this summer.

However, the comparison to gold ETFs introduces a significant variable. While gold has experienced a notable rebound in value recently, evidenced by a surge in prices, the associated investor interest seems lacking. Notably, the largest gold ETF, $GLD, has witnessed consecutive outflows every week since the beginning of the year, reports Blachunas.

Both Bitcoin and Gold to Benefit from Fed Policy

New record highs for both Bitcoin and gold are causing some confusion regarding the risk appetite in global markets. Bitcoin has surged nearly 50% this year, partly due to increased investment in newly launched US exchange-traded funds dedicated to the digital currency.

On the other hand, the rise in gold prices may suggest a defensive stance by investors amid worries about geopolitical tensions or potential corrections in global stock markets following a prolonged period of growth. Speaking to Bloomberg, Chris Weston, head of research for Pepperstone Group Ltd. said:

“Gold has been hugely traded overnight, the volumes are massive — I’ve had a lot of client calls asking what is happening”. Fast-money investors “are buying the momentum and that is what we are seeing in Bitcoin as well.”

Both Bitcoin and gold are seen as potential beneficiaries of anticipated looser monetary policies. Market swaps indicate a 62% probability of a Federal Reserve interest-rate reduction in June, up from 58% at the close of February.