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Move Over Gold: Bitcoin ETF Just Took Lead as Preferred Hedge

Bitcoin ETF products are beating gold with strong inflows, hinting at a shift in risk-hedge preference. With BTC price outperforming, is it time to rebalance your portfolio?
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Move Over Gold: Bitcoin ETF Just Took Lead as Preferred Hedge

Highlights

  • Bitcoin ETF products record second consecutive week of inflows, nearing $2 billion.
  • The negative correlation between both assets suggests that a bullish BTC market looms ahead.
  • BTC price has gained nearly 2% over the past week, whereas Gold managed to erase roughly the same over the past 5 days.

Of late, the US spot Bitcoin ETF products have been outperforming gold. As the flagship coin enjoys a bullish sentiment, the traditional gold appears to be losing its sheen.

Recent price metrics reveal that BTC topped the $96K mark, up nearly 2% over the week. Whereas, gold’s price lost nearly 2% over the last 5 days, at $3,247.40 per ounce.

In line with the bullish trend, BTC ETF products have quietly recorded robust inflows, reaching nearly $2 billion in the past 7 days. Meanwhile, as per the data from the World Gold Council, the Gold ETFs witnessed substantial outflows during the last week of April across most parts of the globe.

The see-saw dynamic between both assets further implies that a bullish Bitcoin market looms right over the horizon as Gold prices drop gradually.

“Ironically, gold and bitcoin are negatively correlated to each other. As the chart below shows, both assets have been taking turns lately, as measured by their Sharpe Ratios,” posted Fidelity’s Global Macro Director Jurrien Timmer on X recently.

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Bitcoin ETF Vs. Gold: Robust Inflows & Sharpe Ratio Hints At BTC Era Ahead

According to the latest statistics by SosoValue, U.S. Bitcoin ETF products saw inflows worth $1.81 billion this week. Data suggests that the exchange-traded products recorded consecutive weekly inflows for the second time this Q2.

During the last week ending April 25, U.S. BTC ETF products had recorded massive inflows of $3.06 billion in inflows, marking the first week of consecutive inflows since March end. Now, with nearly $2 billion worth of inflows as of the week ending May 2, institutional demand for the flagship crypto appears to be on a notable rise.

Source: SosoValue

As of reporting time, these U.S.-based BTC ETF products held $113.15 billion worth of assets. On the other hand, it’s also worth pointing out that gold has been outperforming Bitcoin since the beginning of this year, although a paradigm shift in risk assets’ market sentiment has emerged as contrary.

Here’s What Sharpe Ratio Signals

According to Fidelity’s Jurrien Timmer, the see-saw dynamic between Bitcoin & Gold suggests that the crypto is about to outweigh the traditional asset. The Sharpe Ratio for BTC is at 0.40, whereas gold’s is at 1.33.

Source: Jurrien Timmer, X

For context, the Sharpe Ratio measures the risk-adjusted returns of an asset. The higher the ratio, the better the return per risk unit. However, the negative correlation between the two assets suggests that BTC’s ratio highlights an underperforming movement. Trimmer stresses, “So perhaps we are due for a baton-pass from gold to bitcoin.”

Besides, CoinGape reported that crypto critic Peter Schiff still predicts a Gold rally is possible, primarily driven by U.S. macroeconomic policies. Broader market participants continue to extensively eye Bitcoin ETF products relatively more than Gold, speculating over potential investment opportunities amid dynamic stats.

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CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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