Bloomberg Senior ETF Analyst Eric Balchunas stated Friday that Bitcoin exchange-traded funds may follow the same boom-and-bust trajectory as gold ETFs, with explosive gains giving way to decline and extended stagnation periods. Balchunas argued that both asset classes are wrappers around non-yielding stores of value generating no cash flow, leaving investor sentiment to drive performance rather than earnings or government support. This analysis comes as BlackRock's IBIT, the world's largest spot bitcoin ETF, manages approximately $60 billion in assets, far below the $100 billion it briefly reached in October when bitcoin climbed to an all-time high.
Balchunas Compares Bitcoin ETFs to Gold ETFs' Sentiment-Driven Framework
Balchunas wrote in a post to X that both bitcoin and gold ETFs are "wrappers around non-yielding stores of value that generate no cash flow, leaving investor sentiment---not earnings, coupons or government support, as with stocks and bonds---to drive performance." The analyst added that limited expansion of both bitcoin and gold supply can translate into surging demand producing "price explosions," though that demand can be fickle, arriving in waves rather than building steadily.
IBIT Assets Contract to $60 Billion from October Peak
BlackRock's iShares Bitcoin Trust (IBIT) currently manages about $60 billion in assets. Balchunas said the fund held above the $100-billion AUM threshold for only a few hours in October. IBIT's assets have contracted alongside bitcoin's price, which traded near $63,000 on Friday, down approximately 30% this year and roughly 50% from its October record.
GLD Fund Spent Eight Years Recovering After 2011 Peak
Balchunas compared IBIT's brief time above $100 billion with the SPDR Gold Trust's (GLD) rise in 2011, when the gold fund briefly surpassed SPY to become the world's largest ETF. "I feel like there's a spiritual parallel [between] GLD and IBIT," he said, noting that after GLD soared in 2011, it spent "eight years in doldrums trying to get back to that place." Balchunas said that while the GLD fund suffered from years of weaker demand, "each cycle for gold ETFs has increased the high water mark." GLD, State Street's gold-based ETF, began trading in 2004.
GLD fund's performance. Source: Bloomberg Analyst Eric Balchunas.
BlackRock Digital-Asset AUM Falls 40% Year Over Year
The broader crypto downturn has weighed on BlackRock's overall digital-asset business. The firm reported this week that its second-quarter digital-asset AUM fell about 40% year over year to roughly $49 billion, from nearly $80 billion, primarily reflecting sharp declines in bitcoin and ether prices. Spot gold traded near $4,000 an ounce Friday, down roughly 7% year to date but still about 19% higher over the past 12 months.
US Bitcoin and Ether ETFs Record Weekly Net Inflows
Weaker prices and investor sentiment have weighed on crypto ETF flows. The trend eased last week when U.S. spot bitcoin and ether ETFs recorded weekly net inflows for the first time since early May.
FAQ
What did Eric Balchunas say about Bitcoin ETFs on Friday?
Bloomberg Senior ETF Analyst Eric Balchunas stated Friday that Bitcoin ETFs may follow the same boom-and-bust trajectory as gold ETFs, with explosive gains giving way to decline and extended stagnation periods, because both are non-yielding stores of value driven by investor sentiment rather than cash flow.
How much assets does BlackRock's IBIT currently manage?
BlackRock's IBIT currently manages approximately $60 billion in assets, down from the $100 billion it briefly reached in October when bitcoin climbed to an all-time high. Balchunas said the fund held above the $100-billion threshold for only a few hours.
What happened to BlackRock's digital-asset AUM in the second quarter?
BlackRock reported this week that its second-quarter digital-asset AUM fell about 40% year over year to roughly $49 billion from nearly $80 billion, primarily reflecting sharp declines in bitcoin and ether prices.
