Are investors changing their bets?

Recent changes in the financial markets have sparked a debate about whether investors are shifting their assets from gold exchange-traded funds (ETFs) to Bitcoin ETFs.

Despite the rapid growth of bitcoin ETFs in the US, research from investment banks suggests that the emergence of these digital asset funds has not had a significant impact on gold ETF flows.

How Bitcoin ETFs Don't Inflow into Gold ETFs.

The Greyscale Bitcoin ETF has attracted $11.3 billion globally as of March 21, although the Greyscale Bitcoin ETF has seen significant outflows. Similarly, gold ETFs experienced a decline of $7.7 billion, even as gold hit a record high of $2,200 an ounce.

This is often referred to as “digital gold” as it converts to Bitcoin.

However, JPMorgan's analysis challenges this view. Starting in April 2022, it will feature the exit of gold ETFs before the launch of US Bitcoin ETFs. These outflows are consistent, indicating a trend not directly related to Bitcoin ETF growth.

Read more: How to trade Bitcoin ETF: A step-by-step approach

In addition, World Gold Council data shed light on the broader picture. Between September 2020 and December 2023, investors poured $229 billion into gold bars and coins.

Central banks added an additional $155 billion to their reserves. According to JPMorgan's Nikolaos Panigirtzoglou, this shows a shift in preferences rather than a decline in gold's appeal.

Interestingly, appetite for Bitcoin as an alternative investment is growing, especially among the younger demographic. However, Brian Armor of Morningstar and Nate Geraci of The ETF Store note that the market correlation between gold and Bitcoin ETFs is minimal for now.

“I'm sure there are a few investors moving from gold to bitcoin, but honestly I don't think the outflows from gold will match the introduction of bitcoin ETFs because any interaction between the two is currently limited. And the portfolios show that,” Armor said.

Yet this week, even Bitcoin ETFs are experiencing net outflows. Farside investors reported $836 million in outflows from Bitcoin ETFs over the past four days, reflecting market volatility.

Despite these changes, Bernstein and Standard Chartered have updated their views on Bitcoin. Bernstein predicts it will increase to $90,000 by the end of the year, citing strong market volatility and ETF earnings.

Read more: Bitcoin price prediction for 2024/2025/2030

Standard Chartered is more optimistic, expecting bitcoin to reach $150,000 by the end of the year and $250,000 next year. These predictions draw parallels with gold ETFs, suggesting a future in which Bitcoin will mirror gold's investment trajectory.