Record ETF flows push BTC to $57K: Are investment trends really moving from Gold to Bitcoin ETFS?

Trading volumes for nine spot Bitcoin ETFs hit a new daily record above $2.4 billion as of February 26. According to data from Bloomberg ETF analyst Eric Balchunas, the volume is higher than a record $2.2 billion reached on the first trading day, January 11. Balchunas commented on the record inflows, saying:

Not totally sure reason besides price rally generating interest but it does seem like these things really see heightened action on first day after wknd.

BlackRock’s IBIT led the trading volumes, with $1.29 billion, a new record, while Fidelity‘s FBTC was a distant second with $576 million. Grayscale Bitcoin Trust (GBTC) trading volumes were excluded from the record figures for both January 11 and February 26.

Other ETFs to show high trading volumes were ARK 21Shares, which saw $276 million, and Bitwise (BITB), which had $81 million in total flows. When including volumes from Grayscale’s Bitcoin ETF, the total flows on February 26 was $3.2 billion.

Since January 25, spot Bitcoin ETFs have recorded inflows, except on February 21, when the products witnessed an outflow of $35.7 million. The total inflows year-to-date surpass $5.5 billion, led by IBIT at $5.9 billion and FBTC and ARKB at $3.99 billion and $1.4 billion, respectively. BITB saw $1 billion in inflows, but GBTC recorded outflows totalling $7.4 billion.

The record trading volumes match with positive momentum in the price of Bitcoin (BTC). At the time of this publication, Bitcoin was trading above $57,000 after an intraday gain of 12%. The price is the highest in two years despite being shy of a record above $69,000 in late 2021. The price increase cements notions that increased investments in spot ETFs are fueling BTC price.

The concern: Investors’ shift from Gold to Bitcoin ETFs

The inflows into the spot Bitcoin ETFs elicit discussion about a considerable outflow from gold ETFs. This particularly occurs after the launch of Bitcoin ETFs on January 11. These digital asset ETFs have attracted substantial interest, amassing nearly $10 billion in assets under management (AUM) in just over a month. This does not necessarily imply a direct transfer of investments from gold to Bitcoin but highlights a growing interest in digital assets as modern alternatives to traditional investments​​.

Several factors contribute to this shift. The perception of Bitcoin as a ‘digital gold’ offers a compelling narrative for investors looking for assets that can potentially hedge against inflation and currency devaluation. Furthermore, the advent of Bitcoin ETFs has mitigated some of the hurdles associated with crypto investments, making Bitcoin more accessible to a broader audience.

Rising interest in passive income through NFTs

The trend towards Bitcoin ETFs also signifies the crypto acceptance as a legitimate asset class among traditional investors. It reflects a recognition of Bitcoin’s potential for high returns, despite its volatility, compared to the relatively stable but lower returns of gold investments. However, investors must consider the risks involved, including regulatory changes, market volatility, and the evolving nature of crypto investments.

As investors explore Bitcoin ETFs for potential gains, several new investment opportunities are gaining traction for earning passive income through digital assets, especially NFTs. For example, Kahuna Connect is building a noise-free hub for blockchain project creators, investors, and followers to network, discuss, and enhance their initiatives while gaining a revenue share from the Kahuna Connect platform. Another notable player is the Chimpzee’s ecosystem, where Chimpzee NFT Passports present a unique opportunity for earning passive income and contributing to the conservation of our planet and wildlife.