Gold exchange-traded funds (ETFs) have faced significant outflows this year, while ETFs tracking the spot price of Bitcoin (BTC) have seen strong inflows.
According to Bloomberg intelligence analyst Eric Balchunas, the leading 14 gold ETFs have experienced outflows of $2.4 billion in 2024 as of February 14.
Among the gold ETFs, only three have seen minor inflows this year: VanEck Merk Gold Shares, FT Vest Gold Strategy Target Income ETF, and Proshares UltraShort Gold.
The largest outflows came from BlackRock’s iShares Gold Trust Micro and iShares Gold Trust, with losses of $230.4 million and $423.6 million, respectively.
Meanwhile it’s a pretty bad scene right now in the gold ETFs category… via @SirYappityyapp in our just published weekly flow note pic.twitter.com/C0T17JZpiA
— Eric Balchunas (@EricBalchunas) February 14, 2024
Bitcoin ETFs Attract Around $4 Billion in Inflows
In contrast, preliminary data from Farside indicates that the ten approved spot Bitcoin ETFs have attracted aggregate inflows of $3.89 billion this year, reaching record volumes.
This divergence in investor sentiment highlights the growing preference for Bitcoin over gold as an investment vehicle.
Some speculate that the outflows from gold ETFs are not necessarily flowing directly into Bitcoin ETFs, but rather into US equities driven by the fear of missing out (FOMO).
The decline in gold prices in 2024 has further exacerbated the divergence.
The commodity has experienced a 3.4% loss since the beginning of the year, reaching a two-month low of $1,993 per ounce on February 14.
Conversely, Bitcoin prices have surged by 23.5% during the same period, hitting a two-year high of $52,483 on the same day.
In a recent report, the World Gold Council also highlighted global gold ETF outflows and a reduction in speculative positioning as contributing factors to gold’s lackluster performance.
Additionally, long-term Treasuries and the strength of the US dollar have acted as headwinds, driven by positive US economic surprises.
Gold and Bitcoin have often been compared as safe-haven assets during times of economic and geopolitical uncertainty.
While Bloomberg senior commodity strategist Mike McGlone initially predicted gold would outperform Bitcoin in 2024, the current trend suggests a different outcome.
The preference for Bitcoin, with its potential for higher returns, signals a shift in investor sentiment towards digital assets.
Spot ETFs Atract 10x More BTC Than Miners’ Production
As reported, spot Bitcoin ETFs have managed to accumulate ten times more BTC than what miners were able to produce on Monday.
On February 12, approximately $493.4 million, equivalent to around 10,280 BTC, flowed into spot Bitcoin ETFs.
Among these funds, BlackRock’s IBIT emerged as the clear leader, attracting a massive $374.7 million.
Fidelity’s FBTC fund followed closely behind with a substantial inflow of $151.9 million, while Ark 21Shares’ ARKB fund secured $40 million.
Despite these significant inflows, there were minor outflows of $95 million from Grayscale and $20.8 million from Invesco’s BTCO, resulting in a net inflow of nearly half a billion dollars.
In contrast, Bitcoin miners produced approximately 1,059 BTC, equivalent to roughly $51 million, on the same day, representing only 10% of the amount of BTC accumulated by spot ETFs.
A similar trend was observed on February 9th, with spot ETFs capturing approximately 12,700 BTC, worth a staggering $541.5 million, while mining contributed a mere 980 BTC, valued at around $45 million.
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