Experts say Bitcoin ETF assets under management will exceed gold ETFs by the end of the year

The assets under management of spot Bitcoin ETFs have exceeded $100 billion in one year and are currently challenging to surpass gold ETFs.

Spot Bitcoin ETFs have seen huge inflows over the past two weeks, with BlackRock’s IBIT bearing the brunt of the gains. Last week, total assets under management for Bitcoin exchange-traded funds (ETFs) surpassed $100 billion, with market analysts expecting it to surpass gold ETFs by the end of the year. Of course, this goal will be achieved if inflows maintain momentum and Bitcoin prices soar to all-time highs.

Can Bitcoin ETF surpass gold ETF by the end of the year?

Nate Geraci, cryptocurrency industry expert and president of ETF Store, said that spot Bitcoin ETFs have the potential to surpass gold ETFs by the end of this year. As mentioned, the Bitcoin exchange-traded fund market has grown to $100 billion in less than a year since its launch.

On the other hand, according to the World Gold Council, the gold ETF market soared to $271 billion as of September. In addition, data shows that despite a surge in Bitcoin ETF inflows in November and December, gold ETFs saw outflows for the first time in six months. Therefore, the gap between the two is narrowing rapidly.

Geraci noted that the outcome of his prediction may depend on the comparative performance of Bitcoin and gold prices in the coming weeks. He also pointed out that physical gold ETFs were launched 20 years ago, so the development of a BTC ETF is “astounding.”

BackRock’s iShares BTC ETF (IBIT) has attracted more than $4 billion in inflows since Thanksgiving, a feat that makes it the second-largest ETF to launch in 2024. On Friday, BlackRock’s IBIT attracted another $393 million in inflows, bringing its total inflows to nearly $36 billion.

BTC may see a short squeeze

According to a recent analysis by 10x Research, tightening Bitcoin supply could set the stage for a potential price squeeze. The report highlighted significant Bitcoin outflows from exchanges, driven by growing demand from Bitcoin ETFs and corporate accumulation funds such as MicroStrategy. All eyes will be on next week’s FOMC meeting to determine whether BTC price action can set new all-time highs.

In the past 30 days, 124,000 Bitcoins have been net-out of exchanges, indicating a decline in liquidity. Top cryptocurrency exchanges such as Coinbase, Binance, Gemini, and OKX have seen 7-10% of their BTC reserves withdrawn.

If these trends continue, coupled with strong demand, the market could face a severe Bitcoin supply crunch. The launch of Bitcoin ETF options could exacerbate this situation, potentially triggering a gamma squeeze, further exacerbating price pressures.

At press time, Bitcoin price rose 2% to $101,953, with a market cap above $2 trillion. According to Coinglass data, 24-hour liquidations were $38.6 million, with short liquidations surging to $26.6 million.