Is gold being abandoned in favor of Bitcoin? Analysis

Despite the rapid growth of Bitcoin ETFs in the United States, research from investment banks suggests that the emergence of these digital asset funds has not had a significant impact on gold ETF outflows .

Is gold threatened by Bitcoin ETFs?

Bitcoin ETFs globally attracted $11.3 billion as of March 21, even as Grayscale's Bitcoin ETF saw significant outflows. At the same time, gold ETFs recorded a decline of $7.7 billion, although an ounce of gold reached a record level of $2,200.

This has naturally led to speculation about a shift in favor of Bitcoin, often dubbed “digital gold”.

However, JPMorgan's analysis calls this view into question. Indeed, she notes that the outflows of funds from gold ETFs, since April 2022, predate the launch of American ETFs on Bitcoin. These capital outflows have also been consistent, indicating a trend that is not directly related to the rise of ETFs in the crypto asset.

To know more : Is it better to buy Bitcoin or trade an ETF? We explain to you

Bitcoin and Gold ETF Flows
Bitcoin and gold ETF feeds. Source: Financial Times: Financial Times

Furthermore, data from the World Gold Council points to a more generalized situation. Indeed, between September 2020 and December 2023, investors invested $229 billion in gold bars and coins.

Central banks also added $155 billion to their reserves. According to JPMorgan's Nikolaos Panigirtzoglou, this shows a shift in preference rather than a decline in gold's appeal.

Likewise, it is good to note that the appetite for Bitcoin as an alternative investment is on the rise, particularly among younger people. However, Bryan Armor of Morningstar and Nate Geraci of The ETF Store also observe that the market link between gold ETFs and Bitcoin remains minimal for now.

“I'm sure there is a small contingent of investors moving from gold to Bitcoin, but in reality I don't think the outflows from gold are correlated with the introduction of Bitcoin ETFs because any interaction between the two at the moment is limited and the wallets show that,” Armor said.

However, during this week, even Bitcoin ETFs are experiencing net outflows. Farside Investors noted $836 million in total outflows from Bitcoin ETFs over the past four days, reflecting market volatility.

March 18, 2024451.55.917.
March 19, 202475.
March 20, 202449.312.918.623.3-
March 21, 2024233.42.912.
Bitcoin ETF Flow Chart. Source: Farside Investors: Farside Investors

Despite these fluctuations, Bernstein and Standard Chartered have updated their outlooks on Bitcoin. Bernstein forecasts a rise to $90,000 by the end of the year, citing strong market momentum and the influx of ETFs.

To learn more: Bitcoin Prediction 2024/2025/2030

Standard Chartered is even more bullish, expecting Bitcoin to hit $150,000 by the end of the year and potentially $250,000 next year. These predictions draw on the gold ETF analogy, suggesting a future where Bitcoin could mirror the investment trajectory of gold.

Moral of the story: Can't Bitcoin and gold just coexist?


Disclaimer: In accordance with The Trust Project guidelines, BeInCrypto is committed to providing unbiased and transparent information. This article aims to provide accurate and relevant information. However, we encourage readers to verify the facts on their own and consult a professional before making a decision based on this content.

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