Bitcoin ETFs to outperform gold ETFs, says ETF expert – unless there is a black swan event

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ETFs have seen much higher flows and assets than most expected before launch, and that Unprecedented success has analysts speculating about how high they might reach.

After starting with $28.9 billion in assets at launch – as Grayscale’s flagship Bitcoin Trust converted with its assets – the 11 spot Bitcoin ETFs now have a combined AUM of 61 billions of dollars. Due to large inflows and a rise in the price of bitcoin, their size is approaching that of gold ETFs, which have a combined AUM of approximately $97 billion.

“They’re going to move away from gold ETFs at some point. It will be a big thing,” Eric Balchunas, senior ETF analyst at Bloomberg, told The Block. “I think the only thing that could derail this is some sort of black swan.”

Balchunas said ETFs could be described as The Big Mo, referring to a situation where something catches fire and momentum propels it forward – as in the case of presidential campaigns.

“The dynamism of these ETFs at the moment is extraordinary. As long as the price of bitcoin continues to conform and climb higher – three or four out of five days a week – I don’t really see anything that would slow this trade down for a while, because it’s an upward spiral right now, and it’s kind of feeding on itself,” Balchunas said. “The more the price goes up, the more people get FOMO and are interested, and the more inflows, the more the price goes up.”

Balchunas said that figure will eventually peak, but noted that the numbers continue to get stronger every day. He pointed out that when VanEck’s Bitcoin ETF temporarily reduced its fees to zero, it saw $180 million in inflows, a sign that interest in these ETFs is still very much there.

“So, I mean, they’re white hot. That’s an expression I would use. This won’t last forever. But the question is when will we reach a plateau? “, did he declare.

Balchunas speculated that it would take a significant market decline to bring them back down to earth.

“I think a significant slowdown in the stock markets is probably the only thing that could derail this whole current dynamic. I’m not saying this would necessarily cause Bitcoin to fall, but it would certainly push this story to the back of the mind and out of people’s minds. They would be more concerned about their stocks because, for most people, they are a significant part of the portfolio,” he said.

“So I think as long as markets and stocks and bonds remain stable or rising, I don’t really see anything in terms of a continued growth pattern for them,” Balchunas added.

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