Here's the Lowdown
- Over the past five trading days, U.S. Bitcoin ETF inflows have surged to over $3 billion, while gold ETFs have seen a whopping $1 billion outflow, resulting in a whopping $4 billion gap between the two.
- Analysts speculate that Bitcoin is pulling ahead of gold ETFs because it makes a solid hedge against U.S. asset reallocation, thanks to soaring Treasury yields and waning demand.
- Not one to shy away from making predictions, Standard Chartered anticipates that Bitcoin will smash its all-time high, with targets of $120,000 by the end of Q2 and $200,000 by year-end, even with today's minor market dip.
Take a Peek at SCENE
Investors Prefer Bitcoin ETFs Over Gold as a Superior Hedge Against U.S. Assets
In an investor note, Standard Chartered analyst Geoffrey Kendrick pointed out that the rift between Bitcoin ETF and gold ETF flows is the widest it's been since the U.S. presidential election week in November.
Bitcoin ETFs are beating the drums of their gold counterparts because BTC is "a superior hedge than gold against strategic asset reallocation out of the U.S.," Kendrick wrote.
A sign that such reallocation is on the rise is demonstrated by the skyrocketing U.S. Treasury yields, which in turn hints at declining demand.
"U.S. Treasury term premium (which has a close correlation to BTC) is at a 12-year high," Kendrick explained. "Evidently, U.S.-based investors may be on the hunt for non-U.S. assets."
State Street Markets' Michael Metcalfe echoed this observation in his own note to investors, stating that "long-term foreign investor demand for 30-year Treasurys has been below average all year but ended April with weekly flows close to a five-year low."
It's this drop in demand for U.S.-based assets that's sparking interest in Bitcoin (ETFs). Kendrick reasoned that this trend is intensifying because recent positive signs in the ongoing trade war have dimmed the allure of gold.
"Bitcoin, being decentralized, is the ultimate hedge against issues in TradFi (Traditional Finance), be they hiccups in private sector entities like SVB or public sector snafus like today's Treasury yield scenario," Kendrick told Decrypt. "By contrast, gold's role is more specific, focusing on hedging against geopolitical and trade-related concerns."
As tensions between the U.S. and China ease and exemptions are included in reciprocal tariffs, gold has taken a hit recently. However, with markets still uncertain about the future direction of U.S. economic policies, demand for Bitcoin could remain strong over the next few weeks, according to Standard Chartered. They believe that Bitcoin will set a new record high by the end of this quarter, with a forecast of $120,000 by Q2.
The optimistic tone continues with Standard Chartered's year-end target of $200,000, helped by gains throughout the summer. Bitcoin currently sits at $94,979 after a minor dip of 0.3% in the past 24 hours, with the overall cryptocurrency market dropping by 2%.
Revised by Stacy Elliott.
Cryptocurrency Digest
Macro Trends
- Shift in Investor Perception: Bitcoin is increasingly perceived as a versatile macroeconomic hedge, facilitating decoupling from traditional assets like equities and appealing to investors in uncertain markets as a diversification strategy.
- Regulatory and Market Dynamics: Despite ongoing regulatory uncertainties, particularly around U.S. crypto banking licenses, institutional inflows into Bitcoin ETFs continue to surge, indicating growing confidence in the regulatory environment and Bitcoin's potential.
- Inflation Hedge and Safe-Haven Shift: In comparison to gold, which has traditionally served as an inflation hedge and safe-haven asset, Bitcoin is emerging as the next-generation safe-haven due to its limited supply and utility in decentralized finance. This shift is causing investors to reassess their preferences.
- Performance and Momentum: Bitcoin's recent outperformance of gold, with a 28% increase compared to gold's 23%, is fueling interest among investors seeking higher growth potential.
- Bitcoin ETF inflows have surpassed gold ETF outflows by over $4 billion, highlighting a significant shift in finance.
- Analysts attribute this trend to Bitcoin being a superior hedge against strategic asset reallocation out of the U.S. due to rising Treasury yields and waning demand.
- Standard Chartered predicts Bitcoin will surpass its all-time high, with targets of $120,000 by the end of Q2 and $200,000 by year-end, despite minor market dips.
- The rift between Bitcoin ETF and gold ETF flows is the widest since the U.S. presidential election week in November, indicating a rise in demand for Bitcoin (ETFs).
- Bitcoin is being viewed as a versatile macroeconomic hedge, decoupling from traditional assets like equities, making it an appealing diversification strategy in uncertain markets.
- Institutional inflows into Bitcoin ETFs continue to surge, indicating growing confidence in the regulatory environment and Bitcoin's potential.
- As Bitcoin outperforms gold with a 28% increase compared to gold's 23%, investors are seeking higher growth potential, shifting their preferences from traditional safe-havens like gold to Bitcoin.
- By year-end 2023, markets are expected to see increased flows into Bitcoin, Ethereum, and other altcoins, as well as the introduction of Bitcoin and cryptocurrency ETFs, further highlighting the growth and potential of the crypto market.
