Bitcoin ETFs Surpass Gold Funds in AUM for the First Time: K33 Research

On December 16, U.S. Bitcoin exchange-traded funds (ETFs) reached a significant milestone, surpassing gold ETFs in assets under management (AUM) for the first time. According to data from K33 Research, Bitcoin ETFs—both spot and derivative—collectively exceeded $129 billion in net assets, edging out gold ETFs, which were just shy of that figure.

K33 Research, a leading digital asset research firm based in Norway, highlighted this historic shift in a post shared on December 17. The surge in Bitcoin ETF assets marks a notable moment in the cryptocurrency’s growing institutional adoption. Bitcoin’s rise in the ETF space comes after years of regulatory hurdles and a protracted approval process by the U.S. Securities and Exchange Commission (SEC).

Bitcoin ETFs Outpace Gold ETFs

As of December 16, the total assets in Bitcoin ETFs reached over $129 billion, surpassing the $128 billion held by U.S. gold ETFs. Bloomberg ETF analyst Eric Balchunas clarified that this figure includes both spot Bitcoin ETFs and those that track Bitcoin’s price performance using financial derivatives, such as futures contracts. If you consider only spot Bitcoin ETFs, the gap narrows slightly, with Bitcoin at $120 billion and gold at $125 billion in AUM.

Balchunas remarked that it was “unreal” that Bitcoin funds are now competing with gold in this way, especially after just 11 months of spot Bitcoin ETFs being available. This shift reflects a growing demand for Bitcoin as a store of value and a hedge against inflation, putting the cryptocurrency on par with traditional assets like gold.

A Rapid Rise for Bitcoin ETFs

Bitcoin’s dominance in the ETF market accelerated following the launch of U.S. spot Bitcoin ETFs in January, after a prolonged review process by the SEC. Since then, Bitcoin ETFs have seen an explosive increase in AUM, with U.S. spot Bitcoin ETFs surpassing $100 billion in assets in November 2024. This surge has been attributed to a positive market outlook for Bitcoin, driven in part by rising institutional interest and macroeconomic factors.

Bryan Armour, director of passive strategies research at Morningstar, attributed the surge in Bitcoin ETF assets to the "more positive outlook for the future of Bitcoin" after key events, such as former President Trump’s election win, which spurred market optimism and led to over $5 billion in inflows.

Among the leaders in the Bitcoin ETF space is BlackRock’s iShares Bitcoin Trust (IBIT), which now holds nearly $60 billion in AUM, according to BlackRock’s website. IBIT recently surpassed BlackRock’s iShares Gold Trust (IAU) in net assets, further highlighting Bitcoin’s ascendancy in the asset management world.

The “Debasement Trade”: A Flight to Safe-Haven Assets

The rise of both gold and Bitcoin in the financial markets has been part of a broader "debasement trade." This term refers to a shift toward these assets as investors seek refuge amid growing concerns over global economic instability, geopolitical tensions, and persistent inflationary pressures. JPMorgan’s October report indicated that factors like rising government deficits, structural geopolitical uncertainty, and inflation fears have fueled demand for both gold and Bitcoin.

Bitcoin’s increasing dominance in this trade was evident on December 16, when the Bitcoin-to-gold ratio—which measures Bitcoin’s purchasing power relative to gold—hit a new all-time high. As Bitcoin’s price reached new records, the ratio highlighted Bitcoin’s growing appeal as a store of value alongside gold.

Looking Ahead

The surpassing of gold ETFs by Bitcoin funds represents a significant shift in how institutional investors view Bitcoin’s role in the financial ecosystem. As more funds pour into Bitcoin ETFs and investor confidence continues to grow, Bitcoin’s status as a hedge against inflation and a "digital gold" alternative will likely strengthen.

With Bitcoin ETFs continuing to outpace gold in AUM, and geopolitical risks continuing to loom, the debate over whether Bitcoin will ultimately replace gold as the dominant safe-haven asset is gaining momentum. However, for now, the cryptocurrency’s remarkable rise in the ETF space underscores its growing legitimacy as an asset class.