Bitcoin ETFs on pace to eclipse gold funds, but volatility risk looms, says Bloomberg Intelligence
Analyst Eric Balchunas says bitcoin ETFs could triple gold ETF assets within years, reviving debate over volatility risk for institutional holders.
Bitcoin exchange-traded funds are expanding at a pace that could see them triple the assets under management of gold ETFs within three to five years, according to Bloomberg Intelligence analyst Eric Balchunas, who has drawn a direct parallel between bitcoin’s rapid ascent as an investable asset and gold’s 22-year journey through the ETF wrapper.
Balchunas’s analysis, published this week, sets bitcoin’s fund flows since their US launch in January 2024 against the slower but ultimately larger build-out of gold ETFs since 2004. Bitcoin ETFs have already attracted more than $38bn in net inflows and hold an estimated $120bn in combined assets, a figure gold-backed funds such as SPDR Gold Shares took roughly two decades to accumulate, reaching an AUM range of $160bn to $235bn over that period.
A shared structural quirk
The comparison rests on a feature both assets share and that distinguishes them from equities or bonds: neither bitcoin nor gold generates cash flow. Balchunas argues that, as a result, price movement in both markets is driven almost entirely by investor sentiment rather than earnings or yield, making both prone to the kind of sharp rallies and equally sharp corrections that have characterised gold’s ETF history.
The Block reported that Balchunas specifically likened the trajectory of BlackRock’s IBIT — which briefly crossed $100bn in assets — to GLD’s own precipitous rise in 2011, framing bitcoin’s history of “spectacular gains” alongside the risk of “painful drawdowns” that gold investors have periodically endured.
Brokerage access as the growth engine
According to Balchunas, the accelerant behind bitcoin’s faster accumulation is distribution through mainstream brokerage platforms. Once bitcoin exposure trades on the same infrastructure as any listed equity or gold fund, investors are freed from the operational burden of self-custody, private keys and seed phrases — a friction reduction that gold ETFs also exploited relative to holding physical bullion, but which bitcoin ETFs appear to be converting into inflows more quickly.
That dynamic has implications well beyond US markets. For European asset managers and wealth platforms weighing whether to expand access to bitcoin exposure, the gold ETF precedent is being read as evidence that a commodity-like asset with no cash flow can still command a durable, multi-decade allocation once packaged in a familiar wrapper — provided investors are prepared to tolerate significant drawdowns along the way.
A cautionary note for institutional allocators
The forecast lands as European regulators continue to take a markedly more cautious stance than the United States on retail access to crypto-linked exchange-traded products, with UK and EU frameworks still restricting or heavily conditioning distribution to retail investors even as institutional demand for bitcoin exposure grows under regimes such as MiCA.
Balchunas’s framing effectively doubles as a warning to institutions now building bitcoin allocations: gold’s ETF history was not a smooth ascent but a series of boom-and-bust cycles spanning the 2008 financial crisis, the 2011 peak and subsequent multi-year slumps. If bitcoin ETFs are indeed following a compressed version of that path, allocators betting on continued asset growth may need to plan for volatility on a scale that has, at times, tested even gold’s reputation as a haven asset.
Read more: JPMorgan flags Strategy’s $3bn cash buffer as a bitcoin resilience signal
