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Tuesday, May 28, 2024

Investors Prefer Bitcoin ETFs Over Gold as Both Asset Hit ATHs

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Bitcoin ETFs are receiving increased interest from investors as their preference shifts towards BTC over traditional investments such as gold, even though both assets have recently hit new all-time highs (ATHs).

On Tuesday, Bitcoin skyrocketed above $69,000, momentarily establishing a new record before experiencing a notable pullback.

Bitcoin Surpasses Gold in ETF Inflows

Traditionally viewed as hedges against inflation and valuable assets, Bitcoin and gold have witnessed a significant divergence in investor sentiment this year. However, gold ETFs have decreased in appeal, with withdrawals amounting to around $4.6 billion.

In a recent post on X, Bitcoin Munger wrote that Bitcoin is “demolishing” gold and silver in ETF flows. Munger added that Bitcoin ETFs saw inflows amounting to $717 million, gold ETFs’ inflows were $32 million, and Silver ETFs saw outflows of $19 million.

The comparison of Bitcoin with tangible assets such as gold, especially considering their non-yielding characteristics, has become a focal point among investors, particularly during the low-interest rates prompted by the COVID-19 pandemic.

Recent trends indicate that expectations for changes in monetary policy, global political uncertainties, and concerns about potential downturns in equity markets are playing a more significant role in influencing the price movements of gold.

Meanwhile, the yellow metal is hovering near its record-high price of $2,141. Despite this rise, the precious metal has only had a modest uptick since the year began compared to Bitcoin’s 60% price increase over the same time.

Bitcoin ETFs are Pushing BTC’s Price

Last month, analysts, including Bloomberg’s ETF expert Eric Balchunas, speculated on the possibility of Bitcoin ETFs surpassing gold funds in assets under management (AUM) within the next two years.

Meanwhile, Jeff Kirdeikis mentioned in a post on X on March 4 that Bitcoin was “eating” the yellow metal, whereby BTC ETFs had already achieved 50% of the value of gold ETFs in just a month. He added that while gold had taken the lead for years, we are experiencing history.

Jad Comair, founder of digital asset investor Melanion Capital, remarked that the excitement and hype surrounding the ETFs have far exceeded anyone’s expectations.

The influx of new capital into Bitcoin ETFs has propelled BTC’s price, pushing the crypto to surpass the previous record set in November 2021. According to CoinShares data, more than $7.5 billion worth of capital has flowed into the newly approved Bitcoin ETFs since their launch on January 11.

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