Why are Baby Boomers ditching gold for Bitcoin ETFs?

For as long as there have been markets, gold has been considered a haven in times of hardship.

But that may now be changing, with the mass exodus we have seen in recent months of investors flocking away from – not towards – gold ETFs.

Gold is old, according to World Gold Council

According to the World Gold Council, 2024 began on a tough note for gold ETF flows, with a continued decline in the amount invested in gold-backed ETFs:

“As the market pushed back against bets on early rate cuts by major central banks, gold prices retreated in January, dimming investors’ interest in gold ETFs. Collective holdings of global gold ETFs fell by 51 tonnes to 3,175 tonnes; meanwhile, total AUM lost two percent, arriving at $210 billion.”

This [January 2024] was the eighth consecutive month that gold-backed ETFs had fallen in holding amounts worldwide – particularly in North America and Europe.

Bitcoin ETFs experience inflows of $36 billion

Meanwhile, Bitcoin’s newly minted ETFs, which debuted in North America in January 2024 after being approved by the SEC, have attracted billions.

More than $2 billion was invested in Bitcoin ETFs during their first official week alone.

And, according to Forbes, they are worth north of a combined $36 billion currently.

According to Samer Hasn, a market analyst at Xs.com, this is even more the case as of this week:

“Bitcoin is trying to consolidate above the 52,000 level at the beginning of the new week [on February 19th], after recording the highest weekly close since November 2021… The iShares Bitcoin Trust (IBIT) accounted for the largest share of these net flows.”

Baby boomers: the Bitcoin ETF love generation?

But Bitcoin ETFs may be getting more support from a surprising source: Baby Boomers (the generation of investors born between 1946 and 1964).

In the case of Baby Boomers, certain stereotypes abound: they like safety, they own real estate and some golden oldy equities and, when times get tough, their money is on gold.

Well, all that looks set to change.

According to Bankrate, baby boomers are officially the age group with the largest holding in cryptocurrencies since halfway through 2023, with at least 32% of the market share of cryptos, as opposed to Gen Z’s 11% and Millennials’ 30%.

Why are Baby Boomers shifting to Bitcoin ETFs?

Hasn explained some of the reasons for this movement:

Despite the relatively weak focus of the elderly on cryptocurrencies [directly], with the launch of new Bitcoin funds, we witnessed several advertisements from major asset managers such as BlackRock and VanEck, which were described as “boomers”, apparently targeting this category, which possesses wealth estimated at 84 trillion dollars.”

This is also because, before Bitcoin ETFs were available, younger generations were already invested, says Hasn:

On the other hand, a study titled ‘What do young investors think about crypto ETFs?’ found that investors will not only trade new spot Bitcoin ETFs based on the age factor, but rather the degree of risk tolerance in addition to the desire for more regulation of the cryptocurrency market and its ETFs.”

He added that:

While the study found that spot Bitcoin ETFs may not generate a significantly greater intention for younger generations of investors to invest in them, since they already invest in cryptocurrencies directly.”

Deeper significance of the move

Senior citizens getting stuck into Bitcoin ETFs in a big way is not just a novel idea – it massively changes the flows of capital between asset classes.

That’s because Baby Boomers currently have some 61 percent of North America’s wealth and, with an ageing population in many of the world’s foremost economies, this trend looks set to continue.

This effectively means that two-thirds of the capital is owned by a people group we increasingly don’t understand, and that’s increasingly bullish on Bitcoin.

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