According to a new J.P. Morgan graphic, Bitcoin is already eating into gold’s debut following the introduction of the eagerly awaited spot Bitcoin exchange-traded funds (ETFs).
The graph shows a noticeable inflow into Bitcoin funds at the same time as gold ETFs are seeing an outflow.
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This trend indicates that investors are beginning to favour digital assets over more established havens.
The rise of Bitcoin ETFs
Similar to how gold ETFs changed the way consumers and institutions could acquire precious metals in the early 2000s, the debut of spot Bitcoin ETFs has been a watershed event for the cryptocurrency space.
Now that spot Bitcoin ETFs have joined the market, they’re directly undermining gold’s long-standing reputation as a store of value in addition to introducing a novel kind of investment. This movement is highlighted in the J.P. Morgan supplied graph.
Leaders in the business like Adam Back, who believes Bitcoin will surpass gold and become the largest commodities ETF, provide more support to this trend.
Bitcoin ETFs have accumulated $27.5 billion in a short period of time, surpassing the silver ETFs and aiming to surpass the $90 billion invested in gold ETFs.
Digital gold vs. traditional safe haven
In light of this, trade volumes in precious metals have been flat to dropping, suggesting a potential relationship with the introduction of Bitcoin ETFs.
MKS PAMP’s Nicky Shiels notes that in just 15 days, inflows into US Bitcoin ETFs have topped $25 billion, which is equivalent to the market capitalization of Barrick Gold, the world’s biggest gold producer.
The story that Bitcoin is the new “digital gold” is gaining traction, with assets under management (AUM) for Bitcoin ETF now ranking as the second largest U.S. commodities ETF behind gold. Even while Bitcoin ETFs have come a long way, there is still a long way to go before they can equal the $250 billion in known investor holdings across all precious metals.
In light of probable economic downturns, Bloomberg Intelligence’s Mike McGlone offers a nuanced outlook, speculating that gold’s function may change. He asserts that gold may look “naked” in an increasingly digital world if it isn’t linked with Bitcoin.
