The strong comeback of bitcoin, which recently returned to the symbolic threshold of $1,000 billion in market capitalization, is fueling desire and reviving competition with gold. Driven by massive capital inflows into spot bitcoin ETFs, the king of cryptos could overtake gold more quickly than expected.
An unprecedented craze for Bitcoin ETFs
Powered by a massive influx of capital into US Bitcoin Spot ETFs, the market capitalization of bitcoin exceeded the symbolic milestone of $1,000 billion for the first time since November 2021, on February 14, 2023.
Driven by this bullish momentum, the queen of cryptos is now threatening the domination of gold on the safe haven market, at the risk of causing the yellow metal to fall below the $1,200 mark.
In the space of four days, no less than $2.2 billion flowed into spot Bitcoin ETFs in the United States, according to Thomas Fahrer, co-founder of the Apollo tracking platform. A pace of accumulation significantly higher than that observed in the four weeks following their launch in January 2023.
Interrogates by CNBC on the ability of these index funds to faithfully replicate the price of bitcoin, David LaValle, global director of ETFs at Grayscale Investments, was reassuring.
“ The tracking was truly remarkable. We’ve seen Bitcoin ETFs do a great job of holding very firmly along NAV and we’ve seen a liquidity profile indicative of what we expected “, indicated the leader.
A growing threat to gold’s supremacy
If the arrival of spot ETFs was accompanied by capital outflows from the Grayscale Bitcoin Trust (GBTC), its historic competitor, David LaValle wants to be calm. With 461,983 BTC under management, GBTC still largely dominates the market and now displays a positive premium compared to the price of bitcoin.
But beyond the rivalry between Bitcoin ETFs, their combined growth could ultimately threaten the pre-eminence of gold on the safe haven market. According to Checkmate Research, the market capitalization of bitcoin now reaches 15% of that of all healthy monetary assets.
A trend confirmed by recent investor movements. Since the start of 2024 alone, ETFs (Exchange Traded Funds) backed by the yellow metal have seen net outflows of $2.39 billion, according to Bloomberg. Conversely, in just one month, Bitcoin ETFs have drained more than $4 billion.
Bitcoin: future reference safe haven?
Although not all inflows into Bitcoin ETFs necessarily come from gold funds, this divergence reflects a profound change. As its market capitalization swells, Bitcoin establishes itself as a credible store of value in the eyes of investors, to the point of directly threatening the millennial dominance of gold.
A transition that could happen faster than expected, according to Adam Back, CEO of Blockstream. In this new emerging monetary order, the much-maligned “barbaric relic” could even see its price plunge below $1,200, according to Robert Kiyosaki, famous author of the best-seller “Rich Dad Poor Dad.”
At the time of writing, the gold futures contract is trading at $2,005.90 while bitcoin has just exceeded $52,000 for the first time since mid-January. Certainly, at $52,000, the flagship crypto remains far from its historic record of $69,000. However, investor appetite seems intact. Even among institutional investors, as revealed by the massive inflows into ETFs.
Further proof of its growing status as a safe haven, Bitcoin now outperforms gold. Over the last 30 days, it has gained 35% compared to only 2% for the precious metal. But how far is the king of cryptos capable of soaring? The mad race to the moon may just be beginning.
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