Bitcoin ETF inflows surge, threatening gold’s reign as store-of-value

• Bitcoin ETF inflows surge, threatening gold’s dominance.
• Divergence in fund flows: Bitcoin gains, gold loses.
• Bitcoin acts as a ‘risk-on’ investment and a safe-haven asset.

In a seismic shift within the financial landscape, Bitcoin is rapidly gaining ground as a store-of-value asset, challenging its traditional counterpart, gold. Recent data reveals a substantial surge in spot Bitcoin ETF inflows, particularly in the United States, setting the stage for a potential challenge to gold’s historical dominance.

This shift not only signals a changing tide in investment preferences but also prompts speculation about Bitcoin’s long-term disruptive potential.

Bitcoin ETFs vs gold: the growing divergence

The past week has witnessed an impressive surge in spot Bitcoin ETF inflows, culminating in a near 10% increase in Bitcoin’s price. Notably, the lion’s share of these new investments is pouring into US-based ETFs, reflecting the increasing importance that these funds play in shaping Bitcoin’s overall performance. Analysts suggest that this uptrend is beginning to reveal a growing divergence between global fund flows into Bitcoin and those into gold.

The data from ETC Group demonstrates a stark contrast in the year-to-date net flows, with Bitcoin ETPs experiencing a substantial increase since the start of February. Concurrently, gold has faced net negative flows, signalling a shift in investor sentiment. BlackRock’s iShares Bitcoin ETF, securing a significant share of last week’s inflows, exemplifies this trend, underlining the rising prominence of Bitcoin in the investment landscape.

Bitcoin’s dual role: ‘risk-on’ investment and safe-haven asset

According to analysts, the top 14 gold ETFs have witnessed a considerable outflow of nearly $2.4 billion since the beginning of the year. 

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

In stark contrast, the ten leading Bitcoin ETFs have collectively attracted a robust $3.89 billion in inflows. This trend underscores Bitcoin’s dual nature as both a ‘risk-on’ investment and a reliable safe-haven asset.

Market experts anticipate that this trend will persist, with Bitcoin poised to disrupt gold’s role as…