Can Bitcoin ETPs Outshine Gold and Tech Giant ETFs in 2024

‍

2024 has been a pivotal year for Bitcoin, as BTC spot ETPs have quickly climbed to the forefront of global investment markets As of last week, the year-to-date (YTD) cumulative net flows of all BTC spot ETPs reached an impressive $21.7 billion. This figure ranks BTC ETPs fifth among all ETPs globally—a remarkable achievement. To put this into perspective, BTC ETPs are now ahead of some of the most actively traded ETPs in the world in terms of YTD net flows, including QQQ, AGG, and SPY, which rank sixth, seventh, and fifth, respectively.

‍

BTC vs Gold and other Commodity ETPs

‍

Comparing spot Bitcoin ETPs to their physical counterpart, gold ETPs, reveals a striking difference: while gold ETPs have struggled to reach even $1 billion in net inflows this year, Bitcoin ETPs have amassed more than 22 times that amount. This stark contrast highlights the significant demand for Bitcoin as an investment vehicle. Not including gold ETPs, the cumulative AUM of all spot BTC ETPs of roughly $67 billion is more than 3x the combined AUM of all commodity ETPs combined, which sits at ~$21.9 billion, despite those products having over a decade-long head start. This includes spot, leveraged, and short commodity ETPs, highlighting the immense demand and success of spot BTC ETPs in the market. To cap it off, not only do bitcoin ETPs lead all commodity ETPs in net flows, but they also represent the most successful ETP launch in history across all categories.

‍

Figure 1: Cumulative AUM of ALL US-Domiciled Commodity ETPs Excluding Gold

Source: 21Shares, ETF Database

‍

Bitcoin to Rival Tech Giants and AI?

‍

With the rise in popularity of AI and the continued dominance of the 'Magnificent 7,' the tech sector has been a top choice for investors this year. Yet, when comparing the cumulative net flows of BTC spot ETPs to those of tech ETFs, BTC nearly rivals the tech sector. The top 12 tech ETFs, as classified by Morningstar’s Technology Sector grouping, have seen combined net flows of approximately $22.5 billion—only $0.8 billion more than BTC spot ETPs. This is incredible; in a year dominated by the advancement of AI LLMs and their associated subsectors, the bitcoin spot ETPs have been able to compete. Despite a price drawdown for bitcoin and the broader digital asset market, bitcoinspot ETPs have managed to compete with the inflows of tech giants, speaking to the strong demand and increasing favorability for bitcoin as a store of value and flight to safety asset.

‍

Figure 2: Top 12 Tech ETFs by YTD Flows

Source: 21Shares, BloomBerg

‍

Institutional Demand and Future Catalyst

‍

BTC ETPs are not only a retail story. Our analysis of Q2 13F filings, featured in one of our August research reports, revealed a more than 30% QoQ increase in the number of advisors and institutional holders. This trend is expected to continue as more investors recognize the benefits of bitcoin and its strategic role in a diversified portfolio—an area we've explored in depth in our research, available here.

‍

Likewise, institutional interest in ETH spot ETPs is set to potentially increase as investors develop a clearer understanding of ETH’s use case and its strategic role in a portfolio. Ether seems to fit naturally into the tech or growth sleeve of an investor’s portfolio, similar to allocations in QQQ or XLK. Investing in ETH could be akin to owning a stake in San Francisco during the tech boom of the 1990s and 2000s—it’s a single investment that captures the growth of a groundbreaking technology still in its early stages, with all the innovation and potential that comes with it. While it wasn’t possible to own a stake in San Francisco’s growth back then, ETH provides that opportunity today, allowing direct investment in the future of blockchain innovation. Investors can learn more about ETH in our Ethereum editions of the State of Crypto report.

‍

Figure 2: Growth portfolio with different rebalancing frequencies (5% BTC & 1% ETH allocation)

Source: 21Shares

‍

Regulatory clarity around ETH is likely to boost investor confidence, as it remains one of the few digital assets available to U.S. investors through an ETP wrapper. ETH ETPs offer a familiar and registered investment vehicle, making it easier for both institutional and retail investors to access the asset. This structure not only enhances accessibility but also positions ETH for potentially significant valuation growth as more investors adopt it.

‍

Crypto has emerged as a key issue in this presidential election cycle, underscoring its entry into the mainstream. Platforms such as Polymarket and Kalshi are now regularly cited by major media outlets, and presidential candidates have included discussions of a Federal Bitcoin Reserve and publicly endorsed DeFi projects. Regardless of the election's outcome, both parties have committed to delivering clearer regulations for digital assets. 

‍

2024 has marked a milestone year for BTC spot ETPs, solidifying their position as a leading asset class across global markets. With strong inflows that rival both tech giants and traditional commodities, BTC ETPs have demonstrated robust demand from both retail and institutional investors. As regulatory clarity improves and the broader market embraces digital assets, BTC ETPs are well-positioned to drive further adoption and capital inflows. The momentum established this year sets the stage for continued growth and increased institutional engagement in 2025.

‍