Bitcoin ETFs Surge to $70B, Rivaling Gold Funds

In a rapid surge of adoption, U.S.-listed Bitcoin exchange-traded funds (ETFs) have accumulated $70 billion in assets, surpassing half of what gold ETFs hold in record time. Since their January 2024 debut, Bitcoin ETFs have drawn substantial inflows, totaling $23.89 billion and reaching over 50% of the assets held by U.S.-listed gold ETFs, according to data from SoSoValue and the World Gold Council.

Gold ETFs, which launched two decades ago, currently hold $137.3 billion in assets. By contrast, Bitcoin ETFs reached the $70 billion mark in just ten months, a feat Nate Geraci, president of The ETF Store, highlighted on Twitter, attributing it to the fast-paced mainstream interest in digital assets.

The Appeal of Bitcoin ETFs and Comparisons to Gold

The rapid accumulation of assets by Bitcoin ETFs highlights the increasing recognition of Bitcoin as a potential “safe haven,” a role gold has historically filled due to its stability and hedge against inflation. As Ryan McMillin, chief investment officer at Merkle Tree Capital, noted, “BTC ETFs have been well received, breaking all inflow records as they go.” Daily inflows have been consistently high, with recent figures ranging from $192 million to $893 million.

Gold ETFs have long provided investors with a stable asset class, especially as a defense against volatility. However, McMillin added that comparing inflows is challenging due to inflationary shifts over the two decades since gold ETFs launched. Nonetheless, Bitcoin’s finite supply and decentralized nature continue to appeal to investors seeking an alternative to traditional financial assets.

Jurrien Timmer, director of Global Macro at Fidelity Investments, often describes Bitcoin as “exponential gold,” emphasizing its growth potential as a store of value due to limited supply and expanding network effects. Timmer’s view underscores Bitcoin’s rapid adoption and positions it as a digital asset that could, over time, play a comparable role to gold in investment portfolios.

Performance Comparison: Bitcoin vs. Gold in 2024

Bitcoin has emerged as the best-performing asset of 2024, up 65% year-to-date to $69,533. Gold has also performed well, climbing 16% to $2,746.09 per ounce. The strong performance of both assets reinforces their status as safe havens, with Bitcoin’s rapid gains illustrating the increasing acceptance of digital assets in mainstream portfolios.

However, volatility remains a factor, especially with the U.S. election on the horizon. McMillin commented on Bitcoin’s recent sell-offs, speculating that they may be due to larger funds rebalancing or election-related uncertainties. He remains optimistic about Bitcoin’s trajectory, suggesting it would require a significant catalyst to see a deeper pullback.

Conclusion

The rapid rise of Bitcoin ETFs to $70 billion highlights the growing acceptance of Bitcoin as a potential counterpart to gold in investment portfolios. With mainstream adoption accelerating and Bitcoin ETFs breaking inflow records, Bitcoin’s role as a store of value continues to strengthen. As the year progresses, both assets are poised to maintain their appeal as safe havens, with Bitcoin’s exponential growth reinforcing its position in a diversified investment landscape.