Gold-backed exchange-traded funds (ETFs) faced their fourth consecutive year of outflows in 2024, even as gold prices hit record highs and the Federal Reserve began easing monetary policy. Moreover, Bitcoin ETFs seem to have taken the lead in the ETF market despite being launched less than a year ago. Despite initial optimism driven by expectations of Fed rate cuts, the momentum for gold ETFs faltered following the November U.S. election.
Bitcoin ETFs vs. Gold ETFs: What Do Investors Choose?
Donald Trump’s presidential victory strengthened the U.S. dollar, prompting investors to sell gold ETFs and redirect funds toward equities and cryptocurrencies. Bitcoin ETFs, launched on January 10, 2024, captured $35.24 billion in inflows. BlackRock’s IBIT BTC ETF alone attracted an impressive $37.24 billion, offsetting outflows from Grayscale’s GBTC, which saw $21.49 billion withdrawn.
This shift marked a significant reallocation of investor interest. While gold has traditionally been a safe haven during economic and political uncertainty, its appeal diminished in the face of higher interest rates. Gold, which offers no yield, has struggled since the Federal Reserve began hiking rates in 2022 to combat inflation.
Though gold ETFs suffered, physical bullion demand surged. Geopolitical tensions, including conflicts in Ukraine and the Middle East, spurred central banks in emerging markets and Asian investors to seek gold as a hedge and portfolio diversifier. This physical demand did little to revive interest in ETFs tied to the metal.
BREAKING: Gold ETFs suffer fourth year of sell-offs as investors opt to buy #Bitcoin – BBG🤯
IT IS HAPPENING🚀 pic.twitter.com/KBnz8nGG2O
— Crypto India (@CryptooIndia) January 2, 2025
The U.S. election’s impact on the dollar highlighted the evolving preferences of modern investors. As cryptocurrencies gain institutional traction, Bitcoin ETFs appear to be reshaping investment trends. The inflows into Bitcoin funds underscore a growing appetite for digital assets, even as gold continues to serve its role in physical markets.
In 2024, the divergence between gold ETFs and Bitcoin ETFs illuminated a major shift in asset allocation, with investors increasingly favoring innovation over tradition. Furthermore. Netizens expect the trend to continue in the current year.
Also Read: Bitcoin Tests 1.6x Golden Ratio Multiplier Resistance
Source: https://www.cryptonewsz.com/investors-switch-bitcoin-etf-selling-gold-etf/