Bitcoin Leaves Gold Far Behind as Debasement Trade Favors Cryptocurrency
Bitcoin's price surged 44% in a single quarter, outperforming gold and stocks. Gold gained 8% over the same period, while stocks rose around 3.5%. According to Fiona Cincotta, StoneX Senior Market Analyst, this disparity is not due to investors abandoning gold for Bitcoin, but rather the same macro bet producing a larger move in Bitcoin.
The breakout coincided with U.S. Treasury Department plans to increase buybacks of long-dated government bonds and net inflows into U.S. spot Bitcoin ETFs worth $4.6 billion. This has led to a significant opportunity cost for holding non-yielding assets like gold, as higher Federal Reserve rate expectations continue.
Gold's upside remains capped despite strong demand from gold ETFs, which is being weighed down by renewed expectations that the Federal Reserve could stay hawkish for longer. In contrast, Bitcoin is drawing on a different combination of forces, explaining why its 44% gain trails gold's 8% advance.