Investors in exchange-traded funds (ETFs) seem to have more faith in Bitcoin, often dubbed “digital gold,” than in the traditional precious metal itself, as both assets reach record high prices.
Spot Bitcoin ETFs have gained net flows since January launch
Despite being considered stores of value and inflation hedges, gold ETFs have experienced approximately $4.6 billion in outflows this year, according to data from Bloomberg Intelligence. In contrast, the 10 US Bitcoin ETFs launched in January have attracted net inflows of around $8 billion, marking one of the most successful product launches in investment history.
Investors frequently compare cryptocurrency to hard assets like gold, which offer no yield, particularly in low-yield environments such as the Covid pandemic. Recently, gold seems to be driven more by expectations of monetary easing, geopolitical tensions, and the risk of a pullback in equity markets.
According to a report by BI analysts Eric Balchunas and Andre Yapp, “Growing investor confidence and the strong performance of other asset classes continue to fuel a fear of missing out (FOMO) and have likely benefited from gold investors’ exodus.”
On Tuesday, Bitcoin reached a record high for the first time in over two years but didn’t hold onto its new peak for long. After hitting $69,191, Bitcoin experienced a 6% drop as some traders took profits following this year’s approximately 60% surge. Meanwhile, gold remains close to its all-time high of $2,141.79, as reported by Bloomberg.
