Spot Bitcoin ETFs move investors away from gold, but value remains

  • The approval of spot bitcoin ETFs in the U.S. has broadened the ETF market, offering investors an alternative to gold in their inflation-fighting strategies.
  • While spot bitcoin ETFs have attracted significant assets since their U.S. approval, withdrawals from gold-backed ETFs remain notable.
  • Experts and fund managers suggest that this shift is unlikely to significantly affect the value of bullion over the long term.

Some investors are selling their holdings in gold-backed exchange-traded funds (ETFs) due to the increased interest in bitcoin ETFs, but experts and fund managers stated that this move is unlikely to affect bullion in the long run.

ETF market broadens

Spot bitcoin ETFs may provide investors with an alternative to gold if they’re trying to fend against inflation. ETFs track bonds, commodities, indexes, or a collection of assets similar to an index fund.

The U.S. regulatory approval in January of exchange-traded funds (ETFs) that follow the value of the biggest digital asset globally has created opportunities for future growth in the trillion-dollar ETF market.

Also read: Are spot bitcoin ETFs really better than gold?

Bitcoin ETFs vs. Gold-backed ETFs

As of February 14, LSEG Lipper data indicates that two of the largest new spot bitcoin exchange-traded funds (ETFs) have amassed $5.45 billion and $4.13 billion in assets, respectively, since the U.S. approval on January 10.

Meanwhile, withdrawals from the largest gold-backed ETF, the New York-based SPDR Gold Trust, were $768.9 million, while outflows from the iShares Gold Trust came to $284.6 million.

Also read: Swan Bitcoin CEO anticipates surge in bitcoin activity triggered by the ‘ETF Multiplier Effect’

Hear them out

Given the volatility of bitcoin, several experts and investment managers advised against moving away from gold exchange-traded funds (ETFs).

Bryan Armour, an ETF analyst at Morningstar, said, “Gold has been valued for thousands of years, while bitcoin is in its infancy.”

Susannah Streeter, head of money and markets at Hargreaves Lansdown, also commented, “Bitcoin speculators have vastly different aims and appear willing to gamble on rapid price rises in a search for hot returns, which are by no means guaranteed.”

Sylvia-Shen

Sylvia Shen

Sylvia Shen, a news reporter at BTW media dedicated in Fintech and Blockchain. She graduated from University of California, Davis. Send tips to s.shen@btw.media.

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