Bitcoin ETFs Outstrip Gold as Investors Turn to ‘Better Hedge’ Against US Assets

Bitcoin ETF inflows in the U.S. have topped $3 billion over the past five trading days, with data from Standard Chartered also showing that gold ETFs have suffered an outflow of $1 billion.

Writing in an investor note, Standard Chartered analyst Geoffrey Kendrick also highlighted that the gap between Bitcoin ETF and gold ETF flows has reached $4 billion, which is the biggest it has been since the week of the U.S. presidential election in November.

Bitcoin ETFs are outstripping their gold counterparts because BTC is “a better hedge than gold against strategic asset reallocation out of the U.S.,” Kendrick wrote.

A sign of this reallocation is evident in how U.S. Treasury yields have been rising, which in turn is a sign of falling demand.

“U.S. Treasury term premium (which has a close correlation to BTC) is at a 12-year high,” wrote Kendrick. “Time-of-day analysis suggests that U.S.-based investors may be seeking non-US assets.”

State Street Markets’ Michael Metcalfe proffered a similar analysis this morning in his own note to investors, writing 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 driving increased demand for Bitcoin (ETFs), he reasoned. Kendrick added that recent tentative improvements in the recent trade war has softened interest in gold.

“Bitcoin, by its nature, is decentralised,” he told Decrypt. “As a result it is the ultimate hedge against issues in TradFi, be they coming from the private sector (eg. SVB collapse March 2023) or public sector (perhaps now, with Treasury term premium suggesting [the] same).”

By contrast, gold serves a different purpose in Kendrick’s view, “specifically hedging against geopolitical type issues be they physical or trade war related.”

So because there are signs that the U.S. is now willing to negotiate with China on a potential trade deal, and because both nations have included exemptions in their reciprocal tariffs, gold has taken a relative hit in recent days.

But because markets are still concerned about the general direction of US economic policies, demand for Bitcoin could remain elevated over the coming weeks, with Standard Chartered predicting that it will set a new record high by the end of this quarter.

“Moves like the current one tend to last weeks or months,” explained Kendrick. “I think it lasts through the end of Q2 at least, hence my $120,000 Q2 forecast.”

The optimism doesn’t end there, however, with Standard Chartered’s note also reiterating its end-of-year target of $200,000, helped by gains throughout the summer.

As for today, Bitcoin has declined by 0.3% in the past 24 hours to sit at $94,979, while the cryptocurrency market as a whole has dropped by 2%.

Edited by Stacy Elliott.