Spot Bitcoin exchange-traded funds may follow a trajectory similar to gold ETFs, experiencing both spectacular gains and painful drawdowns, according to Bloomberg ETF analyst Eric Balchunas.
Balchunas compared IBIT, BlackRock’s spot Bitcoin ETF, to GLD, the first gold ETF launched in 2004, observing that gold’s ETF also spent limited time above the $100 billion asset mark before experiencing a significant decline. GLD reached $100 billion in assets under management in 2011 before falling sharply during the subsequent commodity bear market.
IBIT briefly crossed the $100 billion threshold earlier this year amid a wave of enthusiasm for spot Bitcoin ETFs. However, the fund has since seen its assets decline as Bitcoin prices pulled back from all-time highs and ETF inflows cooled.
The comparison highlights the cyclical nature of commodity-style ETFs, which tend to attract heavy inflows during price rallies and experience outflows during downturns. Gold ETFs saw a prolonged period of stagnation after their initial boom, taking years to recover their peak asset levels.
Balchunas noted that the pattern does not diminish the long-term case for Bitcoin ETFs but rather sets realistic expectations for the asset class. Investors who entered at the peak during the initial surge may face extended periods of underperformance, while those who accumulate during drawdowns could see substantial returns over time.
The analysis comes as Bitcoin ETFs have experienced mixed flows in recent weeks, with some days seeing strong inflows and others recording net outflows. The inconsistent pattern reflects broader uncertainty in the cryptocurrency market, which has traded in a wide range since March.
This article was adapted from The Block. Read the original here.
