Gold ETF Sees $2.4 Billion Outflow as Bitcoin ETF Surges

Source : Photo by Zlaťáky.cz on Unsplash

In the investment world, the year 2024 has ushered in a new chapter in the narrative between gold and Bitcoin. Since the launch of 10 spot Bitcoin ETFs on January 11, the market has witnessed an intriguing phenomenon: significant outflows from gold ETFs and a surge in inflows into Bitcoin ETFs.

The two largest Bitcoin ETFs, IBIT from BlackRock and FBTC from Fidelity, have nearly reached $10 billion in Assets Under Management (AUM) just over a month after opening.
On the other hand, on February 14, Eric Balchunas, an analyst at Bloomberg Intelligence, revealed that the top 14 gold ETFs have experienced a combined outflow of $2.4 billion since January.

Figure: Gold ETF performance. Source: @ericbalchunas.

Gold ETFs, iShares Gold Trust Micro and iShares Gold Trust owned by BlackRock,
experienced significant outflows, with losses of $230.4 million and $423.6 million respectively.

SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), the two largest gold ETFs by AUM, also experienced significant net outflows.

From January 11 to February 14, GLD lost approximately $2.6 billion, while IAU lost around $507 million according to ETF.com. This is in stark contrast to the same period last year when both funds saw solid inflows.

Earlier this month, the World Gold Council highlighted global gold ETF outflows, citing reductions in speculative positions and barriers from long-term Treasuries and the US dollar as contributing factors to lackluster gold performance.

This development contradicts the prediction of Bloomberg's senior commodity strategist, Mike McGlone, who forecasted that gold would outperform Bitcoin in 2024.

Speculation on Shift of Gold ETF Investment to Bitcoin

Source : Photo by Aleksi Räisä on Unsplash

This contrast has sparked speculation about investor preferences shifting. Bitcoin, often compared to gold as a hedge asset, has attracted attention as a relatively new form of money, especially with the investment convenience offered by spot Bitcoin ETFs.

Eric Balchunas cautioned that not all gold ETF investors are shifting to Bitcoin.
"It's a very bad look right now in the gold ETF category, which, for sure, I don't think these people are migrating to Bitcoin ETFs," he wrote on X.

Both assets, gold and Bitcoin, have their respective roles in investment strategy. Gold, with its long history as a hedge asset, remains a choice for many investors seeking security in uncertainty.

Meanwhile, Bitcoin, with its significant growth potential and its nature as a digital asset, offers an attractive alternative for those seeking diversification and higher profit potential. For investors, it's important to consider both sides in the context of their broader investment strategies.

Read Too : ETF Bitcoin Spot BlackRock and Fidelity Garner $340 Million Inflows in a Day

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