In the United States, Bitcoin ETFs exceed Gold ETFs

Assets under management (AUM) of U.S.-listed spot Bitcoin exchange-traded funds (ETFs) have officially surpassed those of gold ETFs, according to Vetle Lunde, an analyst at K33 Research. Lunde shared this accomplishment on December 17 via X, marking a historic moment.

The spectacular rise of Bitcoin ETFs

Gold ETFs were first introduced to trading in 2003. Due to this seniority, the precious metal has gained a significant lead. The latter now has more than 20 years of experience. In comparison, Bitcoin ETFs in the United States only launched in January 2024 after years of regulatory delays. Despite this gap, Bitcoin ETFs have therefore managed to outperform gold-linked ETFs in terms of AUM (assets under management). This signals growing confidence from institutions and retail investors in the quintessential digital asset.

“In the US, the AUM of Bitcoin ETFs has surpassed that of gold ETFs. Gold, despite a 20-year lead, was overthrown (in less than a year),” Lunde wrote.

Last January, the approval of these exchange-traded funds marked a turning point for the adoption of cryptocurrencies within traditional financial markets. Indeed, since these products allow investors to gain direct exposure to Bitcoin without holding the asset itself. Thus, this allows more traditional financial players to preserve their benchmarks and own the asset.

But still, due to the steady rise in the price of Bitcoin in 2024, these ETFs have been a real success with the purchase of more than a million BTC in less than a year.

Rapid growth obviously reflects growing institutional interest. Financial giants like BlackRock, Fidelity and Ark Invest have launched Bitcoin ETFs, providing credibility and exposure to a much broader investor base. Their involvement has fueled competition and above all interest with significant and constant flows towards this type of product.

Gold has long been seen as a hedge against economic instability and inflation. For decades, investors have turned to gold-linked assets or ETFs for a safe haven. However, Bitcoin is increasingly seen as “digital gold”. But above all, the number one cryptocurrency offers a more modern and decentralized alternative store of value. Finally, the extremely limited total supply of only 21 million BTC makes the asset particularly attractive in an inflationary environment.

What does this mean for investors?

Bitcoin overtaking gold in AUM represents more than a milestone. Indeed, since this reflects a generational shift in investor sentiment. Young investors, more familiar with digital assets, are adopting Bitcoin as a technological and financial innovation. At the same time, traditional investors seeking higher returns are increasingly turning to BTC to diversify their strategy.

Demand for Bitcoin ETFs also signals growing regulatory acceptance of the cryptocurrency market. After years of resistance, American regulators approved these exchange-traded funds at the start of 2024. At the same time, they paved the way for future investment products linked to cryptocurrencies such as the Ethereum ETFs, which were also approved, or those linked to XRP or SOL, currently considered.

Although Bitcoin’s volatility remains a concern, its institutional adoption and regulatory clarity could spur continued growth. Analysts suggest that as Bitcoin matures, it could attract even more inflows from traditional markets. Potentially, it should therefore strengthen its lead over gold in terms of AUM and restrict the market cap gap

As Bitcoin ETFs set new records, this moment highlights a major shift in how investors view digital assets. Bitcoin is no longer the fringe investment it once was. Now, it has officially entered the mainstream. This includes challenging gold’s long-standing dominance as the ultimate safe haven.

Moral of the story: Bitcoin may start late, but it always arrives before the others.