During a recent conversation with Natalie Brunell, Eric Balchunas, a senior analyst specializing in ETFs at Bloomberg, made a bold prediction regarding the future performance of Bitcoin [BTC] ETFs.
According to the analyst, a significant growth trajectory lies ahead for Bitcoin ETFs, with the potential to surpass gold ETFs and even triple their performance over the coming years.
Advantages of Bitcoin ETFs over Gold ETFs
Conventionally, gold has served as a go-to asset for investors seeking a safe haven amid economic uncertainties. It has been valued for its stability as a hedge against inflation and currency devaluation.
Nonetheless, Balchunas pointed out that Bitcoin introduces a whole new dimension to this arena. While gold’s stable yet slow appreciation appeals to some, it lacks the excitement that many contemporary investors are looking for.
Contrary to common belief, Bitcoin’s volatility is a key factor driving interest in today’s market, as it represents a high-risk, high-return investment opportunity that attracts investors seeking growth potential beyond what gold offers.
Bitcoin: A Paradigm Shift in Currency
Balchunas also introduced a thought-provoking concept of Bitcoin being likened to the “Second Amendment of money,” drawing inspiration from author Benjamin Hart’s analogy.
According to the analyst, similar to how the Second Amendment in the U.S. provides a level of protection to citizens, Bitcoin offers a form of financial independence, shielding users from government monetary policies and potential inflation arising from excessive money printing.
Furthermore, Balchunas characterized Bitcoin’s current status as that of a “teenager,” rebellious and full of energy, with hints of volatility and unpredictability. He humorously remarked,
“It’s teenager gold… if you could take the 4,000-year-old gold and go back to when it was 16 years old, it was probably behaving similarly.”
Performance Update on Bitcoin ETFs
Meanwhile, Balchunas shared that despite projecting $10-15 billion in net flows for the first year alongside fellow analyst James Seyffart, the actual figure has surpassed expectations, hitting close to $24 billion.
He acknowledged the remarkable growth rate of Bitcoin ETFs, significantly outpacing gold ETFs, which took several years to reach a comparable level of inflow.
While acknowledging the unpredictability of external factors such as the forthcoming U.S. election or potential economic downturn, Balchunas emphasized the resilience displayed by Bitcoin ETFs in the face of changing market conditions.
Despite the recent outflows recorded over three consecutive days in November, with a total daily net outflow of $116.90 million on the 5th of November, it is important to note that Bitcoin ETFs maintain strong total assets under management at $69.28 billion, equivalent to approximately 5.04% of Bitcoin’s total market capitalization.