Analyst: Bitcoin ETFs Could Mirror Gold’s Boom-Bust Cycle

Eric Balchunas, a senior ETF analyst, wrote that spot bitcoin exchange-traded funds may follow the same boom-and-bust pattern that gold ETFs experienced, with rapid price gains followed by extended periods of weak inflows.

Balchunas pointed to structural similarities between the two asset classes. Both fund types wrap assets that do not generate income, so returns depend on investor demand rather than earnings, coupons or government support. Limited expansion of supply for bitcoin and for gold can magnify price moves, and demand often arrives in waves rather than building steadily.

The iShares Bitcoin Trust reached roughly $100 billion in assets during bitcoin’s October peak but remained above that level for only a few hours, Balchunas wrote. IBIT now manages about $60 billion as the cryptocurrency’s price has retreated.

Bitcoin traded near $63,000 on Friday, down about 30% year to date and roughly 50% from its October high. Balchunas compared that episode to the SPDR Gold Trust’s 2011 surge, when GLD briefly became the world’s largest ETF and then spent years trying to regain that position.

“Both are wrappers around non-yielding stores of value that generate no cash flow,” Balchunas wrote, adding that each cycle for gold ETFs raised the fund’s high-water mark even after long periods of muted demand.

Spot gold traded near $4,000 an ounce on Friday, down roughly 7% year to date but about 19% higher over the past 12 months.

The broader crypto market downturn has affected asset managers’ digital-asset businesses. BlackRock reported second-quarter digital-asset assets under management fell about 40% year over year to roughly $49 billion from nearly $80 billion, mainly reflecting declines in bitcoin and ether prices.

ETF flows showed some recent change: U.S. spot bitcoin and ether ETFs recorded weekly net inflows last week for the first time since early May.