James Seifert, an analyst specializing in exchange-traded funds (ETFs) at Bloomberg Intelligence, remains optimistic about Bitcoin (BTC)-based funds.
According to the expert, Bitcoin has won the ETF battle against gold and could surpass the precious metal in assets under management (AUM) in the coming years.
Despite gold’s recent strong performance, Seifert highlights the unique advantages in the structure and utility of Bitcoin ETFs. Attracts institutional investors and traders seeking volatile assets for dynamic strategies.
Fundamentally, Seifert recognizes the current strength of gold. “Gold is completely down and inflows are increasing. So the combination of inflows and rising prices is moving gold ETFs completely away from Bitcoin.”
According to a report from CriptoNoticias, the precious metal started the year below $2,500 per ounce and maintained an aggressive upward trend, breaking the $4,000 per ounce barrier and reaching all-time highs in the fourth quarter of this year. Gold-based ETFs have assets under management of $140 billion, up from $140 billion in early January. Reaching $289 billion in Decemberas seen in the following graph.
Ultimately, however, Seifert believes Bitcoin ETFs “could outgrow gold ETFs in terms of assets under management over the long term.” Bitcoin-based funds currently have $112 billion in assets under management, 61% less than gold.
This growth potential Based on increased adoption in educational institutions. Analysts explain that investment has moved from whales (investors with 1,000 or more coins in their wallets) to retailers, wealthy individuals, and now institutions.
“Some companies, like Strategies, buy Bitcoin directly, while others may buy ETFs, especially mature companies, apart from corporate financial strategies based on Bitcoin,” the expert added.
Why Bitcoin can win the battle between ETFs and gold
Seifert’s paper focuses on how traders use these financial instruments. He claims:
One of the reasons we think Bitcoin ETFs have the potential to grow in size is because they better fit the strategies people use ETFs for (active trading, leverage, short selling). Gold ETFs are not as volatile as Bitcoin ETFs and are not as heavily traded in the trading community. Volatility therefore acts as a “hot sauce” – a “seasoning” that adds excitement and practicality – giving Bitcoin an edge in this long-term battle.
James Seifert, ETF Analyst.
Unlike gold, which is primarily seen as a static haven, Bitcoin offers greater utility in modern wallets. “Bitcoin has a slightly higher correlation to risk assets, but people use it for similar reasons: portfolio diversification and a theoretical hedge against currency depreciation,” Seifert said.
Mr. Seifert examines this point in detail. “Because we have leveraged ETFs and other tools, people are using them to actively trade, create leverage, short sell, etc. in a different way than gold.” Therefore, in an environment of regulatory and political uncertainty, BTC behaves differently.
As can be seen from the graph, Bitcoin continues to exhibit its characteristic volatility, but a greater panorama of technological maturity is beginning to emerge, and the extreme volatility peaks seen in previous periods are gradually decreasing.
Institutional stability in the face of historical change
Bitcoin is often referred to as “digital gold,” but Seifert warns of a perception gap. “A lot of people see it as a store of value or a safe haven, but the market essentially treats it as a risk asset. It’s negotiated as such. Over time, could that change? In theory yes, but we’re not even close to that at the moment.
but, Institutional investor participation through ETFs could ease extreme price cycles. “For institutional investors and ETF holders, the extreme bullish spikes and bearish dips will be somewhat limited for now. Time will tell, but I think a 70-80% decline is probably not going to happen.”
Seifert called the Bitcoin ETF launch historic, saying, “It’s one of the most successful launches of any group in particular, but also one of the most successful in history for the iShares Bitcoin Trust (IBIT) (a fund managed by BlackRock) alone.” This early success supports the idea that in the long term, assets under management in these products could exceed those in gold.
