Gold ETFs Face Significant Outflows
Gold exchange-traded funds (ETFs) have experienced substantial outflows this year, with the leading 14 gold ETFs losing $2.4 billion as of February 14. Only three gold ETFs have seen minor inflows: VanEck Merk Gold Shares, FT Vest Gold Strategy Target Income ETF, and Proshares UltraShort Gold. The largest outflows came from BlackRock’s iShares Gold Trust Micro and iShares Gold Trust.
Bitcoin ETFs Attract Strong Inflows
Preliminary data from Farside indicates that approved spot Bitcoin ETFs have attracted aggregate inflows of $3.89 billion this year, reaching record volumes. This shows a growing preference for Bitcoin over gold as an investment vehicle. Some speculate that the outflows from gold ETFs are flowing into US equities instead of Bitcoin ETFs due to fear of missing out (FOMO). The decline in gold prices and the surge in Bitcoin prices further highlight this divergence.
Factors Contributing to Gold’s Lackluster Performance
The World Gold Council attributes global gold ETF outflows and a reduction in speculative positioning as factors affecting gold’s lackluster performance. Long-term Treasuries and the strength of the US dollar also act as headwinds due to positive US economic surprises. Despite initial predictions that gold would outperform Bitcoin in 2024, the current trend suggests a shift in investor sentiment towards digital assets.
Spot Bitcoin ETFs Accumulate More BTC Than Miners’ Production
Spot Bitcoin ETFs have managed to accumulate ten times more BTC than what miners produced on February 12. On that day, approximately $493.4 million flowed into spot Bitcoin ETFs, with BlackRock’s IBIT attracting the largest amount. In contrast, Bitcoin miners produced approximately 1,059 BTC, representing only 10% of the BTC accumulated by spot ETFs. This trend was observed on February 9th as well.
Conclusion
Gold ETFs have faced significant outflows while Bitcoin ETFs have attracted strong inflows. This reflects a growing preference for Bitcoin over gold as an investment vehicle. Factors contributing to gold’s lackluster performance include global gold ETF outflows, a reduction in speculative positioning, long-term Treasuries, and the strength of the US dollar. Despite initial predictions favoring gold, the current trend suggests a shift in investor sentiment towards digital assets. Spot Bitcoin ETFs have accumulated significantly more BTC than what miners have produced, indicating high demand for Bitcoin investment products.
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