Recent developments in the financial markets have sparked debate about whether investors are shifting their assets from gold ETFs to Bitcoin ETFs. Bitcoin ETFs have grown quite rapidly in the US. Despite this, research from investment banks shows that this has not significantly affected precious metal ETF outflows.
Are Bitcoin ETFs causing an outflow in gold ETFs?
cryptokoin.comAs you follow from , there were significant outflows in the Grayscale Bitcoin ETF. Despite this, Bitcoin ETFs attracted $11.3 billion globally as of March 21. Simultaneously, gold ETFs experienced a decline of $7.7 billion. By the way, it should be noted that gold reached a record level of $ 2,200 during this period. Despite this, the exit took place. This has led to speculation about a shift towards Bitcoin, which has been dubbed “digital gold”.
But JPMorgan’s analysis challenges this view. It reveals that gold ETF outflows, which began in April 2022, occurred before the launch of US Bitcoin ETFs. The consistency of these outflows points to a trend that is not directly tied to the rise of the Bitcoin ETF.
Market link between gold and Bitcoin ETFs
Additionally, World Gold Council data sheds light on a broader picture. Between September 2020 and December 2023, investors invested $229 billion in bullion and coin gold. Central banks added another $155 billion to their reserves. According to JPMorgan’s Nikolaos Panigirtzoglou, this suggests a shift in preference rather than a decline in gold’s appeal.
Interestingly, the appetite for Bitcoin as an alternative investment is growing, especially among the younger population. But Morningstar’s Bryan Armor and The ETF Store’s Nate Geraci observe that market connectivity between gold and Bitcoin ETFs remains minimal for now. In this context, Armor makes the following assessment:
I’m sure there is a small group of investors switching from gold to Bitcoin. But in reality, I don’t think gold outflows are related to the introduction of Bitcoin ETFs. Because right now any interaction between the two is limited and the portfolios show it.
Bitcoin ETFs saw a breakout this week, but price predictions soared!
But even Bitcoin ETFs have experienced net outflows throughout this week. Farside Investors noted that there was a total outflow of $836 million from Bitcoin ETFs in the last four days. He stated that this reflects the fluctuation in the market. Despite these fluctuations, Bernstein and Standard Chartered updated their Bitcoin outlook. Bernstein predicts it will rise to $90,000 by the end of the year, citing strong market dynamics and ETF inflows.
Standard Chartered is even more optimistic, expecting Bitcoin to reach $150,000 by the end of the year and potentially $250,000 next year. These predictions are similar to gold ETFs, pointing to a future where Bitcoin could mirror gold’s investment trajectory.
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