The crypto community is viewing Gold investors move to Bitcoin as a sign of the cryptocurrency’s rising status as a legitimate asset class
Multiple experts from the crypto industry have credited the substantial investor outflow from Gold as one of the primary reasons for Bitcoin’s current bull run. As the price of Gold plunged over the last week, falling 4.62% to $1857, experts explained that the sudden disinterest in the traditional inflation hedge can be attributed to investors moving to another inflation hedge–Bitcoin (BTC).
Charlie Morris, founder, and CIO at ByteTree Asset Management explained how the pullback in Gold can be linked with the investor inflows to Bitcoin through a tweet. “With bond yields up and inflation expectations down, Gold has taken a hit. This justifies a $50 sell-off, but the price is down to $120. I’d attribute the excess to flows moving towards Bitcoin”, he stated.
Morris’s analysis was also echoed by CNBC’s Mad Money host Jim Cramer who said that outflows from Gold Electronic Fund Transfers (EFT) were “all going to crypto”. This assertion was further backed when netizens tracked the inflows and outflows from Grayscale’s Bitcoin investment trust and Gold ETFs.
The staggering observations from the experts come days after Bitcoin topped $40000.
Gold’s influence in driving the Bitcoin bull run is being viewed as a sign of the cryptocurrency’s rising status as a legitimate asset class. While both Gold and Bitcoin are considered safe-haven assets that could protect wealth against inflation and overcome macroeconomic uncertainty, the price movements of the last week indicate that Bitcoin might be closer to winning the narrative race.
“The surge in Bitcoin is indicative of froth but not only in that market, in many other areas where risk premiums have come down sharply in the past year despite a recession”, said Kevin Caron, portfolio manager for Washington Crossing. “We view Bitcoin as a proxy for risk appetite”, he added.
Coinshares chief revenue officer Frank Spiteri commented on the narrative proposing Bitcoin as an inflation hedge in an interview with Bloomberg by saying that Bitcoin’s position as a hedge against the dollar’s weakness is gaining further value “in the face of a highly unconventional monetary policy environment”.
“It seems like we’re in the middle of a simultaneous awakening among institutions to Bitcoin as an uncorrelated store of value assets,” he explained.
However, not everyone believes that Bitcoin’s ascendancy will last. Long-time Bitcoin sceptic and Gold investor Peter Schiff said in a tweet “Today’s weak economic data on jobs is causing investors to buy risk assets and sell safe-havens like Gold. The weaker the economy gets the more money the Fed prints to prop it up. So, the real risk is inflation, and once investors understand this, they will seek safety in Gold”.