Bitcoin, the world's largest cryptocurrency, has become the second most popular commodity in exchange-traded funds (ETFs) in the US, surpassing silver in terms of assets under management (AUM). According to data from ETF.com, as of January 18, 2024, there were 12 bitcoin ETFs in the US, with a combined AUM of $38.7 billion, while silver ETFs had a total of $34.2 billion across 14 funds.
Bitcoin ETFs are funds that track the price of bitcoin and trade on stock exchanges, allowing investors to gain exposure to the cryptocurrency without having to buy or store it directly. They are seen as a more convenient and regulated way to invest in the digital asset, which has been volatile and prone to hacking and fraud.
The first bitcoin ETF in the US was launched in October 2023 by ProShares, following the approval by the Securities and Exchange Commission (SEC). Since then, several other providers have followed suit, including VanEck, Invesco, Valkyrie, and Bitwise. The demand for bitcoin ETFs has been strong, as investors seek to diversify their portfolios and hedge against inflation and currency devaluation.
Bitcoin ETFs have also benefited from the rally in the price of bitcoin, which hit a new all-time high of $86,000 on January 16, 2024. Bitcoin has been boosted by the adoption of several major companies, such as Tesla, Microsoft, and Starbucks, as well as the endorsement of celebrities, such as Elon Musk, Jack Dorsey, and Paris Hilton. Bitcoin is often referred to as "digital gold", as it shares some of the characteristics of the precious metal, such as scarcity, durability, and portability.
Silver, on the other hand, has lagged behind gold and other commodities in the past year, as the industrial demand for the metal has been affected by the COVID-19 pandemic and the supply chain disruptions. Silver ETFs have seen some outflows, as investors have shifted their preferences to more innovative and disruptive sectors, such as technology, biotechnology, and renewable energy.
However, some analysts believe that silver still has potential to catch up, as the global economy recovers and the demand for green technologies, such as solar panels and electric vehicles, increases. Silver is also seen as a hedge against inflation and currency debasement, as central banks and governments have unleashed unprecedented stimulus measures to support the economy.
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