Bitcoin ETFs test investor commitment to gold-backed paper
By Ashitha Shivaprasad and Manya Saini
(Reuters) — A surge of interest in bitcoin exchange-traded funds is prompting some investors to swap out holdings in gold-backed ETFs, although analysts and fund managers said they are unlikely to challenge bullion longer term.
Spot bitcoin ETFs could offer investors looking to hedge against inflation an alternative to gold. ETFs track an index, commodities, bonds or a basket of assets like an index fund.
And January's U.S. regulatory green light for ETFs that track the price of the world's largest digital asset has set the ETF market — worth trillions of dollars — up for further gains.
The advent of ETFs in gold in the early 2000s added a major pillar of support to the market by creating new demand, causing prices to soar in subsequent years.
«We anticipate that bitcoin could substitute for gold in some investor portfolios. It may serve a similar role as a hedge against global disorder and financial system dysfunction,» said Jason Benowitz, senior portfolio manager at CI Roosevelt.
Since the Jan. 10 U.S. approval, two of the biggest new spot bitcoin ETFs, iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund, had accumulated $5.45 billion and $4.13 billion in assets respectively as of Feb. 14, LSEG Lipper data shows.
Meanwhile, the largest gold-backed ETF, New York's SPDR Gold Trust (P:GLD), saw outflows of $768.9 million over the same period, while the iShares Gold Trust had outflows of $284.6 million.
NEW HAVEN?
The launch of the new products comes against a rally in the prices of crypto tokens. Bitcoin surged more than 150% in 2023, while gold climbed a far more modest 13%.
«Overall, the crypto industry is maturing and… with more regulatory approval and a new
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