Substantial inflows into global bitcoin exchange-traded products, including the recently approved U.S.-based exchange-traded funds, could, in the long term, threaten gold's position as the world's primary store-of-value, an analyst said.

According to ETC Group Head of Research André Dragosch, there is an increasing divergence between global fund flows into bitcoin and equivalent flows into gold. "This might be an early sign for bitcoin stealing gold’s crown as the primary store-of-value," Dragosch told The Block.

The analyst added that the large majority of new investments overall into bitcoin appear to be related to investments into U.S.-based ETFs. "There is an increasing importance of those new ETF flows for bitcoin’s overall performance," he said.

Data from ETC Group shows that year-to-date net flows into global bitcoin exchange-traded funds and products have increased substantially since the beginning of February. The observed trend partly stems from a recent slowdown in outflows from Grayscale's converted GBTC fund. The Block's Data Dashboard shows a deceleration in GBTC outflows since the last week of January.

According to The Block's data, last Thursday saw ETF inflows totaling $389.55 million versus an outflow of $168 million. In the past week, BlackRock's iShares Bitcoin BTC -1.073% ETF (IBIT) secured the largest share of inflows, with the fund receiving $224.3 million last Thursday alone.

Compared to the net inflows for spot bitcoin ETFs and global ETPs from Canada, Europe, and Asia, those for gold have experienced an increase in net negative flows since the beginning of the year, according to ETC Group data.

Bitcoin combines 'risk on' investment and store-of-value

Ryze Labs analysts took a similar view to that observed by the ETC Group, saying that since the start of the year, "the top 14 gold ETFs have experienced a significant outflow of $2.4 billion, while in stark contrast, the ten leading bitcoin ETFs have collectively attracted $3.89 billion in inflows."

"This trend reinforces our confidence in bitcoin's dual role as both a 'risk-on' investment and a reliable safe-haven asset; we continue to believe that bitcoin will outperform gold in both market conditions," the Ryze Labs analysts said in an email sent to The Block.

Dragosch anticipates this trend to continue long-term with an ultimate expectation "that bitcoin will ultimately disrupt gold as the prime store-of-value."

However, the ETC Group Head of Research stressed that the current market cap of global gold ETPs is around three times as large as bitcoin's ETP and ETF combined market cap. "In this respect, bitcoin's ETP and ETF market cap could possibly leapfrog gold in the next two years, via price appreciation," he added.

The largest digital asset by market capitalization was changing hands for $52,357 at 6:45 a.m. ET, according to The Block's Price Page. The GM 30 Index, representing a selection of the top 30 cryptocurrencies, slipped 1.72% to 114.39, in the past 24 hours.

The price of bitcoin has increased by over 1% in the past 24 hours. Image: The Block.