The Rise of Bitcoin ETFs: A New Preference Among Investors
Bitcoin has been on an impressive price rally recently, capturing the attention of many investors. Whether it’s breaking key price levels or achieving milestones in ETF inflows, the cryptocurrency has been making headlines consistently.
Just this week, Bitcoin surged past $68,000, edging closer to the $70,000 mark. However, the price has seen a slight dip to $67,442 at present, representing a 2.25% decrease over the past day but maintaining strong monthly gains of 6.86%.
With the current price hovering around $70,000 and the record inflows into Bitcoin ETFs, reaching this milestone doesn’t seem far-fetched.
SoSo Value data reveals that on October 21st, total net inflows into Bitcoin ETFs reached $294.29 million, contributing to a cumulative inflow of $21.23 billion. Total net assets now stand at $65.34 billion, accounting for 4.88% of the cryptocurrency’s total market capitalization.
BlackRock’s IBIT Leading the Bitcoin ETF Market
Notably, a significant contributor to these inflows is BlackRock’s iShares Bitcoin Trust (IBIT). Despite the price drop, IBIT witnessed inflows of $329 million on October 21st, surpassing $23 billion in total net inflows.
Eric Balchunas, a senior ETF analyst at Bloomberg, highlighted the exceptional performance of IBIT, attracting $1.1 billion in new cash. Surpassing Vanguard’s VTI in year-to-date flows is another significant achievement for IBIT.
Even more remarkable is the fact that IBIT, a relatively new entrant, is competing with ETFs with decades of establishment and managing huge volumes of capital. With $26 billion in assets under management (AUM), BlackRock’s IBIT is now among the top 2% of global ETFs.
Bitcoin ETFs vs Gold ETFs
The surge in Bitcoin ETF inflows raises questions about whether these investment products are diverting capital from traditional safe-haven assets like gold.
Balchunas weighed in on the Bitcoin versus gold competition, suggesting that Bitcoin ETFs and the emergence of Bitcoin itself may have overshadowed gold this year. He estimated that gold could have attracted inflows of up to $10 billion if not for the rise of Bitcoin ETFs.
This shift in investor preference reflects Bitcoin’s growing popularity and its increasing role as a competitor to gold in the asset market.
Rising Institutional Interest Amidst Waning Retail Engagement
Bitcoin ETFs’ position in the market signals a surge in institutional interest, while retail involvement seems to be slowing down. Google Trends data shows a notable decline in searches for “Bitcoin” and “Bitcoin ETF.”
Search interest in “Bitcoin ETF” has remained subdued since the launch of spot ETFs in January 2024, with a score of just 2 last week.
Similarly, searches for “Bitcoin” have significantly dropped since March, scoring 33 last week. This shift underscores the changing dynamics in the market landscape.