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Gold ETFs Suffer Outflows While Bitcoin ETFs Hoover Big Bucks

Gold ETFs experience significant outflows

In 2024, gold ETFs encountered a notable setback, witnessing outflows amounting to $2.39 billion. This trend marks a significant shift in investor sentiment towards gold-tracking exchange-traded funds, which have historically been considered a safe haven. According to Bloomberg intelligence analyst Eric Balchunas in a February 14 X post, the 14 leading gold ETFs experienced a collective outflow of $2.4 billion. Among these, only three funds, namely VanEck Merk Gold Shares, FT Vest Gold Strategy Target Income ETF, and Proshares UltraShort Gold, reported minor inflows.

The largest withdrawals were observed in BlackRock’s offerings, with the iShares Gold Trust Micro and iShares Gold Trust facing outflows of $230.4 million and $423.6 million, respectively. This movement underscores a declining investor interest in gold as the spot price of the precious metal continues to drop, setting a challenging scene for gold ETFs in the current year.

Bitcoin ETFs capture investor interest and their money

Contrasting sharply with the outflows from gold ETFs, Bitcoin ETFs have seen a surge of investor interest in 2024, amassing aggregate inflows of $3.89 billion. This remarkable uptick in investment is coupled with record volumes since the launch of the 10 approved spot Bitcoin ETFs on January 11. Preliminary data from Farside highlights this growing enthusiasm for Bitcoin as an investment vehicle, pointing to a significant shift in the financial market's dynamics.

Portfolio manager Bitcoin Munger remarked on the trend, stating:

“Not only is Bitcoin sucking up funds, but gold is hemorrhaging AUM at an alarming rate across many ETFs.” 

This sentiment captures the growing appeal of Bitcoin ETFs among investors, contrasting the outflows seen in the gold sector. Eric Balchunas, however, offered a nuanced view, suggesting the shift might not solely be a direct migration from gold to Bitcoin ETFs but could also reflect a broader US equity FOMO (Fear of Missing Out).

Amidst this investment shift, Bitcoin pioneer Jameson Lopp shared a chart comparing the performances of the two ETFs, provocatively questioning the well-being of gold investor and noted Bitcoin detractor Peter Schiff, further fueling the discourse on the investment landscape's evolution in 2024.

 

Market analysis and expert insights

Gold has faced a downward trajectory, losing 3.4% of its value since the year's start, dropping to a two-month low of $1,993 per ounce on February 14. This decline in gold prices, coupled with significant outflows from gold ETFs, signals a cooling investor sentiment towards what has traditionally been viewed as a financial safe haven.

Bitcoin has experienced a robust increase of 23.5% over the same period, reaching a two-year high of $52,483 on February 14. This surge underscores Bitcoin's growing acceptance and confidence among investors, positioning it as a compelling store of value and investment choice during times of economic and geopolitical uncertainty.

The World Gold Council has attributed gold’s lackluster performance to global ETF outflows and reduced speculative positioning, alongside the strengthening of long-term Treasuries and the US dollar. This situation has been further challenged by Bloomberg senior commodity strategist Mike McGlone’s prediction earlier in February that gold would outperform Bitcoin in 2024, a forecast that has yet to materialize as expected.