Over the past five weeks, U.S. bitcoin exchange-traded funds (ETFs) have attracted more than $9 billion in new inflows. BlackRock’s iShares Bitcoin Trust ETF (IBIT) has led the surge. By contrast, gold-backed funds have seen over $2.8 billion in outflows during the same period.
Drivers Behind the Rotation
Easing trade tensions have weakened demand for traditional safe havens like gold. At the same time, growing concerns about U.S. fiscal stability are boosting bitcoin’s appeal as an alternative store of value.
Earlier this month, bitcoin reached a record high of $111,980. The rally was supported by positive regulatory developments, such as progress on a stablecoin bill, and rising macroeconomic uncertainty.
Performance Comparison: Gold vs. Bitcoin
Bitcoin: Up about 15% year-to-date, with an all-time peak at $111,980.
Gold: Up more than 25% year-to-date but trading roughly $190 below its own record high.
Views from Market Strategists
Jefferies’ global equity strategist Christopher Wood remains bullish on both assets. He says, “Gold and bitcoin are the best hedges against currency debasement among G7 countries.”
However, skeptics point to bitcoin’s high volatility. In past market shocks—such as the unwinding of yen-funded carry trades—bitcoin has tumbled alongside risk assets.
Bitcoin as a Broader Hedge
Standard Chartered’s Jeff Kendrick argues that bitcoin offers a unique hedge. He highlights two key risk categories:
Private-sector risks: For example, the collapse of Silicon Valley Bank in 2023.
Government-sector risks: Including threats to U.S. Treasury stability and potential challenges to Federal Reserve independence.
Because bitcoin is decentralized, Kendrick says it can better protect against threats to the financial system than gold.
Evidence of Non-Correlation
Pepperstone research strategist Dilin Wu notes that bitcoin’s intraday correlation with major benchmarks—such as the Nasdaq, the U.S. dollar, and even gold—has been very low over the past month. This shift suggests investors may increasingly view bitcoin as a true hedge or a non-correlated asset, rather than merely a speculative trade.
Fiscal Concerns and Credit Downgrades
Recent stress on U.S. public finances has deepened the debate. Moody’s Ratings withdrew its last AAA credit rating for the U.S., matching earlier downgrades by Fitch and S&P Global. These actions reflect worries over ballooning deficits and debt levels.
Outlook
While gold has outperformed bitcoin so far this year, the inflow trend into bitcoin ETFs underscores growing investor interest in digital assets as a complement—or alternative—to traditional safe havens. As policy uncertainty and fiscal concerns persist, both gold and bitcoin are likely to remain key components of diversified portfolios.
