Bitcoin ETFs on Track to Overtake Gold ETFs: A New Era for Digital Assets

The year 2024 has ushered in a significant breakthrough for digital assets, particularly for bitcoin (BTC), driven by increased institutional adoption. This shift has occurred through two key avenues:

1. The integration of bitcoin into public balance sheets as a treasury asset.
2. The success of U.S. spot-listed exchange-traded funds (ETFs) that have amassed over 1 million BTC.

Bitcoin ETFs vs Gold ETFs

A report from K33 Research reveals that U.S.-listed bitcoin ETFs have surpassed U.S.-listed gold ETFs in terms of assets under management (AUM), including leveraged products such as futures-based ETFs. As of Dec. 17, Bitcoin ETFs reached AUM worth $129.25 billion, edging out Gold ETF AUM at $128.88 billion, according to Vetle Lunde, analyst at K33 Research.

However, when comparing spot-based products exclusively, Gold remains slightly ahead. According to Senior Bloomberg ETF Analyst Eric Balchunas, U.S. bitcoin spot ETFs hold $120 billion in AUM compared to $125 billion for Gold ETFs.

CME Activity and Market Momentum

The CME exchange, primarily used by institutions, continues to demonstrate strong activity, with futures open interest approaching new highs, reaching 212,635 BTC in open interest contracts. The report notes that the basis trade premium has continued to rise, reaching 16.4% — the highest level since November 2023. This indicates that CME traders anticipate increased momentum as the year comes to a close.

The report further highlights:

• January contracts are trading at sharp premiums relative to December contracts, with the contango widening to 1.5% on Monday — the highest next-month premium recorded since November 2023.
• The December contract on CME remains the most valuable, with open interest equivalent to 113,480 BTC.

The momentum has continued for the past month, as the U.S. spot-listed bitcoin ETFs have seen net inflows every day since Nov. 27, totaling $6.5 billion, according to Farside data. A large portion of these net inflows are part of the cash and carry trade as the basis trade premium continues to widen and with a growing amount of open interest contracts on the CME.

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