Gold or Bitcoin? Investors Flock to Bitcoin ETFs as Gold ETFs Bleed Billions

It is not strange that the investment field is full of uncertainty, and the future fate of companies and projects depends on the investors’ decisions. 

Currently, investors face difficulties choosing between gold or bitcoin, and the debates intensify because of market volatility. Evidently, the spotlight is currently on ETFs, with significant shifts observed in investors’ preferences.

Gold ETF vs Bitcoin ETF

Leading gold ETFs have witnessed staggering outflows of $2.4 billion in 2024, coinciding with a decline in the spot gold price. On the contrary, ETFs tracking the spot price of BTC are experiencing unprecedented volumes and inflows, marking a significant optimism in investor sentiment.

According to data from Bloomberg intelligence analyst Eric Balchunas, outflows from gold ETFs have been substantial, with only a few exceptions like VanEck Merk Gold Shares and FT Vest Gold Strategy Target Income ETF. BlackRock’s iShares Gold Trust Micro and iShares Gold Trust are among the most brutal hit, losing $230.4M and $423.6M, respectively.

Meanwhile, the approval of 10 spot Bitcoin ETFs has fueled excitement among investors, resulting in aggregate inflows of $3.89B and record volumes since their launch on January 11. 

This growth in interest has been attributed to BTC’s impressive performance, with prices skyrocketing by 23.5% since the beginning of the year, reaching a two-year high of $52,483 on February 14. 

Portfolio manager Bitcoin Munger noted that not only is BTC sucking up funds, but gold is haemorrhaging AUM at an alarming rate across many ETFs. Yet, Balchunas also suggests that the shift may not solely be driven by migration to BTC but could also be influenced by US equity FOMO.

The stark contrast ​​ between the performance of gold and BTC ETFs reflects the broader economic landscape. While gold prices have seen a decline of 3.4% in 2024, BTC continues its upward trajectory, attracting investors seeking higher returns amidst economic uncertainties. 

Are Gold ETFs Safe?

Historically, gold has been revered as a safe-haven asset, while Bitcoin’s emergence as a digital store of value has presented investors with an alternative investment. The recent approval of Bitcoin ETFs by regulatory bodies represents a significant milestone in mainstream financial acceptance.

As investors weigh their options, the choice between gold and Bitcoin ETFs rages down to individual risk tolerance and investment objectives. While gold ETFs offer stability and a traditional hedge against market volatility, BTC ETFs present opportunities for higher returns with higher risks.

Final Remarks

The dynamics between gold and Bitcoin ETFs show the developing nature of the investment landscape. Whether investors opt for the stability of gold or the volatility of BTC, the decision ultimately reflects their confidence in operating in uncertain market conditions.