TL;DR
- Gold ETFs have seen a significant reduction in investments in 2024, with the top 14 suffering a loss of $2.4 billion as of February 14, 2024. The most substantial reductions were observed in BlackRock’s iShares Gold Trust Micro and iShares Gold Trust.
- Bitcoin ETFs have experienced a surge in capital inflow, with the ten sanctioned spot Bitcoin ETFs drawing a combined inflow of $3.89 billion this year, setting new records.
- This shift in investment trends could signal the beginning of a new era in investment preferences, with digital assets like Bitcoin gaining more prominence globally.
In 2024, Gold Exchange-Traded Funds (ETFs) have witnessed a significant reduction in investments, while Bitcoin ETFs have seen a surge in capital inflow. As reported by Bloomberg intelligence analyst Eric Balchunas, the top 14 gold ETFs have suffered a loss of $2.4 billion as of February 14, 2024.
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
Historically, Gold ETFs have been viewed as a secure investment during periods of economic instability. However, they are currently losing favor with their digital equivalents. The most substantial reductions were observed in BlackRock’s iShares Gold Trust Micro and iShares Gold Trust, with losses amounting to $230.4 million and $423.6 million, respectively.
On the other hand, preliminary data from Farside reveals that the ten approved spot Bitcoin ETFs have drawn a combined inflow of $3.89 billion this year, setting new records. This shift in investor sentiment underscores the increasing preference for Bitcoin over gold as an investment option.
There is speculation that the capital moving out of gold ETFs may not be flowing directly into Bitcoin ETFs, but instead into US equities, driven by the Fear Of Missing Out (FOMO). The drop in gold prices in 2024 has further widened this gap. The commodity has seen a 3.4% decrease since the start of the year, hitting a two-month low of $1,993 per ounce on February 14.
Why Investors Are Choosing Bitcoin ETFs Over Gold ETFs in 2024
In contrast, Bitcoin prices have risen by 23.5% during the same timeframe, reaching a two-year peak of $52,483 on the same day. A recent report by the World Gold Council also pointed out global gold ETF outflows and a decrease in speculative positioning as factors contributing to gold’s underperformance.
The growing preference for Bitcoin, given its potential for higher returns, indicates a shift in investor sentiment toward digital assets. Even though Bloomberg senior commodity strategist Mike McGlone originally envisioned that gold would outperform Bitcoin in 2024, the recent trend suggests otherwise.
This change in investment trends could signal the beginning of a new era in investment preferences, with digital assets gaining more prominence globally. The significant influx of funds into Bitcoin ETFs represents a paradigm shift in investment trends, possibly marking the advent of a new safe haven.
