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BlackRock's gold ETF declines, but its Bitcoin ETF surges with massive inflow

Bitcoin is challenging the throne that gold has occupied for ages.

Gold ETFs shed $2.4 billion amid Bitcoin ETFs' massive inflows

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BlackRock has seen around $423 million fleeing out of its gold exchange-traded fund (ETF), iShares Gold Trust, since the start of this year. Ironically, its newborn Bitcoin-backed fund has recorded massive inflow, according to data from BitMEX Research and Bloomberg ETF analyst Eric Balchunas. BlackRock’s Bitcoin ETF inflow tops $5 billion since its first trading day.

Balchunas’ data shows that the gold ETF market is bleeding. The majority of gold ETFs show a negative flow of funds for the year-to-date, indicating a general trend of investors pulling funds out of gold fund. SPDR Gold Shares (GLD), one of the largest and most traded ETFs, shows the heaviest outflow at around $2.3 billion. Only three ETFs have a positive inflow, with VanEck Merk Gold Shares leading with around $16 million inflow.

While gold ETFs have lost their glitter, spot Bitcoin ETFs have seen strong inflows. Over $10 billion was poured into currently traded spot Bitcoin funds (excluding Grayscale Bitcoin Trust) as of February 15, BitMEX Research’s data shows. These funds have also accumulated over 1% of Bitcoin supply within a month of trading.

Despite the stark difference in inflow dynamics, Balchunas suggests that the rotation out of gold does not necessarily indicate reallocation to Bitcoin ETFs. However, it may reflect a broader trend of Fear of Missing Out (FOMO) on rising US stock prices.

Balchunas said in another post that the growth in spot Bitcoin ETFs is significantly faster compared to a well-established gold ETF like GLD.

Sharing a similar viewpoint, Matt Hougan, Chief Investment Officer of Bitwise, previously noted Bitcoin ETFs’ exceptional performance compared to gold ETFs in terms of early inflows.

The respective price movements of the underlying assets have further exacerbated the current divergence between gold and Bitcoin investment vehicles. Gold is currently trading at around $2,000, down over 3% year-to-date. On the other hand, Bitcoin broke through $52,000, its highest level since 2021.

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