Why Bitcoin’s ‘great’ transition might leave gold ETFs behind

Posted: February 22, 2024

• Ray Dalio changed his views on Bitcoin, recognizing it as a competitor in the emerging currency space
• With predictions of Bitcoin potentially outpacing gold ETFs in AUM, its role as a preferred store of value is being reinforced

In a major turn of events, Ray Dalio, popular investor and the CIO of Bridgewater Associates, is showing a newfound openness and confidence in Bitcoin (BTC). The exec was previously known for his skepticism towards Bitcoin. 

He has, on multiple occasions, had considerable doubts about BTC being a trustworthy asset, both in terms of currency and store of value. However, in a recent interview, Dalio claimed,

“The evolution of Bitcoin over the years is one of the things that has influenced changes in my view. I think we’re entering an era where there’s going to be a competition of currencies, and Bitcoin is going to be a part of that competition.”

ETFs: The flag-bearers of Bitcoin’s recent victories

Spot Bitcoin ETFs have seen a remarkable surge in investor interest, amassing an impressive $10 billion in assets under management (AUM) merely 20 days after their market debut. 

Additionally, this surge in Bitcoin ETFs’ popularity comes at a pivotal moment in financial history. BTC has emerged as the fastest asset to hit a trillion-dollar market cap, taking just 12 years to achieve this milestone. 

The dynamics fueling this growth are multifaceted, including a 25% decrease in BTC available on exchanges compared to levels before the 2020 bull cycle. These factors align with predictions that BTC could hit valuations as high as $10 million per coin, as suggested by Michael Saylor, CEO of MicroStrategy.

Bitcoin ETFs to surpass gold? 

Stock market analysts are predicting a market crash similar to the 1987 stock market crash. However, Bitcoin can emerge as a “safe haven” for investors during this period, owing to its limited supply and growth predictions that are free from inflation and political governance.

Furthermore, Bitcoin ETFs are rapidly closing the gap on gold in terms of assets under management, with gold standing at $93 billion and BTC at $37 billion. In fact, there’s speculation that BTC could soon surpass gold ETFs. An investor at Simply Bitcoin commented on the same, stating, 

“Money is already fleeing the gold ETFs and pouring into the Bitcoin ETFs. This is the great transition.”

This shift underscores BTC’s role not just as a digital currency but as a credible and increasingly preferred store of value.

Is Bitcoin going to be the ultimate asset to invest in?

Dalio’s recent confidence in BTC resonates with that of crypto-figures like Saylor or companies like BlackRock and Fidelity. The larger market sentiment is to invest in this asset class. In fact, according to billionaire Richardo Salinas,

“There will only be 21 million Bitcoins for the whole planet. They aren’t making any more of it.”