Since the first spot BItcoin ETFs launched on January 10, 2024, closely followed by spot Ethereum ETFs' debut on July 23, crypto ETFs have made significant strides that depict it could challenge Gold ETFs' $257 billion legacy. This Crypto ETFs vs Gold ETFs analysis shows just how this could happen.
After multiple rejected applications and repeated struggles over the years, the crypto industry has finally secured approval from the US SEC to introduce mainstream financial products to the crypto market. The emerging asset class, however, has generated massive enthusiasm and is already poised to beat the $257 billion legacy that has put Gold ETFs in a class of its own.
Crypto ETFs vs. Gold ETFs in Less Than One Year
When Gold ETFs launched in 2003, they generated substantial interest that made it easier for investors to grow their exposure to gold without physically holding the asset. The development democratized gold investment practices and has pulled large swaths of assets over the last two decades.
As of August 2024, the World Gold Council says that gold ETFs have total assets under management (AUM) value of $257 billion. Meanwhile, as of September 13, 2024, spot Bitcoin ETFs have reached an impressive AUM of $61 billion only six months after going public.
Similarly, spot Ethereum ETFs have seen substantial inflows within two months of launching, save for Grayscale's Ethereum Trust (ETHE), which has witnessed massive outflows due to its high expense ratio. Both crypto ETFs have already amassed over 25% of the gold spot ETFs' two-decades-old AUM within one year.
Enthusiasm about crypto ETFs doesn't look ready to halt anytime soon, and all appears set for the asset class to upset gold ETFs' legacy. Meanwhile, Solana ETFs' applications with the US SEC could receive a green light soon.
Crypto ETFs Deserve the Hype, Despite the Odds
Crypto ETFs make investing in crypto seamless since investors don't need to fret about creating a virtual wallet, securing private keys, or dealing with crypto exchanges. Interested investors could readily purchase and sell ETF shares like any other stock.
Additionally, crypto ETFs enjoy the regulatory supervision of financial authorities like the SEC, which is reassuring to risk-averse investors. Traders could also purchase or sell crypto ETFs during stock exchange market hours, offering the asset class high liquidity that means you can readily convert your investment into cash whenever necessary – unlike some direct crypto investments with lower liquidity.
However, while crypto ETFs make the industry more accessible, the advanced liberty comes with management fees, which can impact users' returns over time. Other potential drawbacks could be the limited (two) options of crypto ETFs and unique tax implications based on the investor's country or tax situation.
Final Remarks
Crypto ETFs could challenge the two-decades-old $257 billion legacy of Gold ETFs, per its accrued Assets Under Management (AUM) value less than one year after launching. Despite odds like tax implications and management fees, crypto ETFs have enough mouthwatering benefits that show they deserve the hype they're receiving.