Bitcoin and Gold Reach All-Time Highs as ETF Inflows Continue
Bitcoin and Gold are once again in the limelight as both asset classes hit fresh all-time highs on Tuesday, March 5. The massive inflows into spot Bitcoin ETFs continue with daily trading volume skyrocketing all the way to over $10 billion.
The Rise of Bitcoin ETFs
Bloomberg’s Senior ETF strategist Eric Balchunas highlights the impact of massive inflows into Bitcoin ETFs in a very short time since their launch. The ten spot Bitcoin Exchange-Traded Funds (ETFs) have surged past the $50 billion mark in assets, just seven weeks after their introduction.
- Initially launched with under $30 billion in assets
- $8 billion of total assets attributed to investor flows
- Remaining assets from appreciating value of Bitcoin
According to Balchunas, if these ETFs maintain their current momentum and add $10 billion in assets per month, they could potentially surpass the assets under management of gold ETFs by this summer. However, there is a significant variable when comparing Bitcoin and gold ETFs.
Gold’s Lack of Investor Interest
While gold has experienced a notable rebound in value recently, evidenced by a surge in prices, the associated investor interest seems lacking. The largest gold ETF, $GLD, has witnessed consecutive outflows every week since the beginning of the year.
Both Assets Benefit from Fed Policy
The rise in both Bitcoin and gold prices may suggest different risk appetites in global markets. Bitcoin has surged nearly 50% this year, partly due to increased investment in newly launched US exchange-traded funds dedicated to the digital currency.
On the other hand, the rise in gold prices may suggest a defensive stance by investors amid worries about geopolitical tensions or potential corrections in global stock markets following a prolonged period of growth.
Both Bitcoin and gold are seen as potential beneficiaries of anticipated looser monetary policies. Market swaps indicate a 62% probability of a Federal Reserve interest-rate reduction in June, up from 58% at the close of February.
Hot Take: Bitcoin and Gold Reach New Highs Amidst Diverging Market Sentiments
Bitcoin and gold have both reached all-time highs recently, but their surges are driven by different market sentiments. While Bitcoin’s rise is fueled by increased investment in ETFs, gold’s increase may indicate a defensive stance by investors. Both assets, however, stand to benefit from anticipated looser monetary policies.
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