$7 Billion Flows into Bitcoin and Gold as Investors Seek Protection from Dollar Crisis

Investors have been flocking to Bitcoin and gold in recent days, pouring $7 billion into exchange-traded funds (ETFs) for both assets over five US trading sessions. This influx of capital is a record combined haul, with about 70% of it going towards the largest vehicles: SPDR Gold Shares (GLD) and BlackRock's iShares Bitcoin Trust (IBIT).

The surge in demand comes as both gold and Bitcoin have seen significant price increases, with Bitcoin breaking above $80,000 and gold trading above $4,600 an ounce. The move is being attributed to a renewed focus on US debt, Treasury-market strains, and a softer dollar.

Experts say the debasement trade, where investors seek assets with constrained supply as protection against currency erosion, is driving this demand. Bitcoin's fixed 21 million supply makes it an attractive candidate for this trade, although its volatility remains a concern.

BlackRock has been a key player in promoting Bitcoin as a legitimate investment option, publishing research that shows a 1% to 2% allocation to Bitcoin could improve the risk-adjusted performance of a traditional 60/40 portfolio. Bernstein also notes that policymakers may ultimately favor currency debasement over fiscal restraint, strengthening the case for assets with limited supply.

While some experts remain cautious about the sustainability of this trend, others see it as a long-term shift in investor behavior. As ByteTree's Charlie Morris points out, both Bitcoin and gold have positively sloping 200-day moving averages and carry strong bullish readings.