Cryptocurrency Shakes Up Traditional Portfolio Preferences: Bitcoin Overtakes Gold
Traditional Finance Shifts Preference Towards Bitcoin, Outpacing Gold as IBIT Surpasses GLD in Year-to-Date Capital Flows
For the first time, BlackRock's Bitcoin exchange-traded fund (ETF), the iShares Bitcoin Trust (IBIT), has seen more year-to-date inflows than the SPDR Gold Trust (GLD), marking a groundbreaking shift in institutional investors' preferences. This change comes even as gold hit record highs, with a YTD return of 23.07%.
Safe Havens Face a Challenge
The early months of 2025 witnessed turbulence in global politics and a weakened U.S. dollar due to President Donald Trump's new trade policies. Historically, such conditions boost gold, often considered a safe-haven asset for risk-averse investors. However, this year, Bitcoin has seemingly defied conventions, with BlackRock's spot Bitcoin ETF registering inflows of $6.96 billion compared to GLD's $6.51 billion.
According to Bloomberg analyst Eric Balchunas, IBIT now ranks sixth among all U.S. ETFs in YTD flows, despite posting a return of only 4.03%. This significant feat occurred despite gold's recent rally, pushing its price to an all-time high of $3,435 per ounce.
Some analysts interpret this shift in fund flows as a sign of growing institutional conviction that Bitcoin is no longer just a speculative asset but a long-term portfolio staple.
"Wall Street can't get enough of Bitcoin," tweeted Zaheer of Split Capital, highlighting the enthusiasm for the cryptocurrency among fund managers.
Bitcoin's Institutional Rise
The bullish stance on Bitcoin aligns with regulatory milestones such as the rollback of SAB 121, a controversial bulletin issued by the U.S. Securities and Exchange Commission (SEC) that made it difficult for banks to offer crypto custody services. The reversal allowed mainstream financial giants to capitalize on the opportunity and expand their influence in the Bitcoin space.
Towards the end of last month, IBIT recorded its second-largest single-day inflow ever, adding $970.9 million on April 28 alone. This performance boosted its total Bitcoin holdings beyond the symbolic 600,000 BTC threshold, making it three times more Bitcoin-rich than its closest competitor, Fidelity's FBTC.
Meanwhile, Bitcoin has seen its price climb nearly 3% in the past 24 hours, trading at $97,026. Despite short-term volatility, Bitcoin has demonstrated impressive returns in the last 30 days, with a 29% increase, and year-over-year, it has grown by 52%.
Institutional Adoption Driving the Crypto Landscape
Institutional interest in cryptocurrency has surged, with heavyweights like BlackRock and Fidelity leading the charge. Hedge funds have also taken notice, increasing their stakes in IBIT, reflecting their growing confidence in Bitcoin's long-term potential. As institutions diversify their portfolios, they view Bitcoin as a strategic asset due to its low correlation with traditional investments.
The rise of Bitcoin can be attributed to a combination of factors, including market sentiment and volatility, regulatory developments, and historic inflows into Bitcoin ETFs. Despite its volatility, the market's resilience and low risk compared to traditional assets attract more speculative capital. Favorable regulatory developments, broader acceptance of cryptocurrencies, and the launch of various spot Bitcoin ETFs by major asset managers have contributed to increased inflows into Bitcoin ETFs like IBIT.
With Bitcoin's increasing adoption and growing institutional support, it's clear that the digital asset is shaking up traditional finance, posing a formidable challenge to more conventional safe-haven assets like gold.
Sources:1. Yahoo Finance2. Bloomberg3. Wall Street Journal4. Coinbase5. Barron's
Binance (Exclusive Offer for our readers): Register a new account using THIS LINK to receive $600*
Bybit: Open a $500 FREE position on any coin with this LINK* (Limited offer for our website readers)
*Terms and conditions may apply. Please refer to the respective platforms for more details.
Facebook Twitter LinkedIn Telegram
- The inflows into BlackRock's Bitcoin exchange-traded fund (IBIT) have surpassed the SPDR Gold Trust (GLD), signaling a shift in institutional investors' preferences towards cryptocurrency, with Bitcoin overtaking gold as a preferred asset.
- Bitcoin, despite posting a lower return than gold this year, has registered significant inflows, as seen with IBIT recording the sixth-highest YTD flows among all US ETFs, indicating growing institutional conviction in Bitcoin's long-term status as a portfolio staple.
- The bullish stance on Bitcoin has been driven by regulatory milestones, such as the rollback of SAB 121, which allowed mainstream financial giants to capitalize on the opportunity and expand their influence in the Bitcoin space.
- Institutional interest in cryptocurrency, led by organizations like BlackRock and Fidelity, is driving the cryptocurrency landscape, with Bitcoin demonstrating impressive growth, attracting speculative capital due to its low correlation with traditional investments and resilience in the face of volatility.
