Gold Continues to Adjust and That Could Be Good for Bitcoin

Gold has been one of the best-performing global assets in recent months, rising to a new high in the weeks following President Trump’s tax order on Liberation Day in early April. The final price peaked at over $3,500 an ounce on April 21, with the price of bitcoin at that time being $87,000 - close to the Liberation Day, but about 20% lower than the record high reached in January. However, since then, gold has decreased nearly 10% to the current price of just over $3,200 an ounce. At the same time, bitcoin has risen about 10% to a two-month high of $97,000.

Geoff Kendrick of Standard Chartered said: “I think bitcoin is a better hedge against risk than gold amid the strategic asset reallocation away from the United States.” Kendrick noted that the ETF cash flow situation has reversed along with prices, with cash inflows into bitcoin funds rising stronger than cash inflows into gold funds. Moreover, Kendrick stated that the last time the inflow of funds into bitcoin ETFs was as large as this compared to gold was during the week of the U.S. presidential election. Two months later, the price of bitcoin rose by more than 40% to over $100,000.