Gold exchange-traded funds (ETFs) saw their total holdings decline by 3% during 2024. This figure marks the fourth consecutive year of losses, according to specialists at The Kobeissi Letter, a capital market analysis newsletter.
Demand for gold ETFs has been steadily declining. Source: The Kobeissi Letter.
Despite the decline, demand for physical gold reached record levels, with more than 1,300 tonnes purchased in the third quarter of 2024.
The rise in preference for physical gold has been driven primarily by markets in China and India, where the metal remains a traditional form of investment, the report said.
In addition, since 2022, central banks have purchased approximately 2,800 tonnes of gold, an unprecedented figure that reflects the search for refuge in safe assets during periods of economic uncertainty.
Gold prices rose 27.2% in 2024, marking the third-best annual performance in more than four decades. Last October, the metal hit an all-time high of $2,792 per ounce, highlighting its relevance as a safe haven asset.
Bitcoin could be taking market share away from gold
Despite this context, gold ETFs have faced challenges that could be related to the growth of bitcoin.
The iShares Bitcoin Trust (IBIT) bitcoin ETF, managed by BlackRock, surpassed the iShares Gold Trust (IAU) gold ETF of the same firm in assets under management. While it took IAU two decades to amass $33 billion, IBIT managed to almost double this figure in less than a year, reaching $57 billion in December.
BlackRock's Bitcoin and Gold ETFs' assets under management. Source: CryptoQuant.
The success of bitcoin ETFs contrasts with the situation of gold ETFs, although IBIT started 2025 with significant outflows. On January 2, the fund recorded a withdrawal of more than $332 million, the highest figure since its creation.
Despite this, the 12 bitcoin-based ETFs available in the United States have accumulated more than $35 billion in less than a year, consolidating investor interest in these financial instruments.
Eric Balchunas, an ETF specialist at Bloomberg Intelligence, believes that BTC-based ETFs could surpass precious metals ETFs in value by 2025. He even claims that bitcoin-based funds “have the potential to triple the size of gold ETFs over the long term.”
These instruments have quickly gained traction, offering investors a regulated way to gain exposure to the cryptoasset market without needing to purchase bitcoin directly.
The competition between gold and bitcoin as safe haven assets continues to redefine investment strategies. While physical gold maintains its historical relevance, bitcoin ETFs are attracting a new generation of investors interested in diversifying their portfolios with digital assets.
