BlackRock IBIT to Mirror Gold's Post-Boom Stagnation, Analyst Says

BlackRock’s IBIT, the world’s largest spot bitcoin ETF, currently holds around $60 billion in assets after briefly touching $100 billion in October. Bloomberg Senior ETF Analyst Eric Balchunas warns this rapid contraction mirrors the historical boom-and-bust cycle of gold ETFs, suggesting crypto funds are entering a prolonged period of stagnation.

Balchunas drew a direct comparison between IBIT and the SPDR Gold Trust (GLD). "I feel like there's a spiritual parallel [between] GLD and IBIT," he noted, pointing out that GLD briefly surpassed SPY in 2011 to become the world's largest ETF. After that peak, gold funds spent "eight years in doldrums trying to get back to that place."

The structural similarities between the two assets explain their parallel trajectories. "Both 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," Balchunas said. Because neither asset pays a yield, capital flows are entirely dependent on market mood.

This sentiment-driven demand can trigger sharp upward movements. Limited expansion in the supply of both bitcoin and gold can translate into "price explosions" when momentum shifts. However, Balchunas noted that this demand is inherently fickle, often arriving in intense bursts rather than building a sustainable, steady baseline for institutional allocators.

The broader crypto downturn is already straining major financial institutions. BlackRock reported this week that its second-quarter digital-asset assets under management fell roughly 40% year over year to about $49 billion, down from nearly $80 billion. The firm attributed this contraction primarily to sharp declines in both bitcoin and ether prices.

For context on the potential duration of a crypto cooldown, spot gold traded near $4,000 an ounce on Friday. While gold is down roughly 7% year to date, it remains about 19% higher over the past 12 months. Meanwhile, U.S. spot bitcoin and ether ETFs finally recorded weekly net inflows last week for the first time since early May.

Despite the warning of extended stagnation, Balchunas offered a measure of long-term optimism for patient capital. He observed that while GLD suffered through years of weak demand following its 2011 peak, "each cycle for gold ETFs has increased the high water mark." If IBIT follows this exact pattern, current drawdowns could eventually be erased, though investors may need to wait years rather than months to realize returns.