Gold topped $4,000 an ounce for the first time this week, confirming the macro story that is spilling over into Bitcoin demand, and spot ETFs seeing record fourth-quarter inflows.
Downgrade trading refers to investors moving their holdings from fiat cash and bonds to assets that maintain purchasing power when government debt becomes high or the reliability of a currency becomes questionable.
Investors buy scarce assets such as gold, Bitcoin, and physical goods to protect against currency erosion if monetary policy eases or fiscal slides accelerate.
The logic applied is that if the real value of a currency is eroding, the solution is to own what cannot be printed.
Additionally, real yields have fluctuated as fiscal risks have increased, and the U.S. money supply has increased by 44% since 2020, creating favorable conditions for scarce assets.
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The rise in gold prices crystallized the hedging narrative. Analysts attribute the rally to heightened concerns about public debt, a prolonged U.S. government shutdown, and persistent demand for safe-haven assets, which they say is fueled by central bank purchases and ETF inflows.
Bitcoin has been mentioned alongside gold as an alternative to hedge against disruption, and flows support this association.
Last week, the Spot Bitcoin ETF recorded net inflows of $3.5 billion, while crypto funds overall saw total inflows of approximately $5.9 billion. This is a record of both Bitcoin and crypto commodity weekly flows.
The timings reflect the shared driver. With gold breaking above $4,000, macro hedging bids have proven effective and broadened the audience for exposure to hard assets.
ETFs, on the other hand, remove custody and operational friction for U.S. institutions, making Bitcoin a marginal recipient.
Even if assets do not track each other over time, simultaneous fluctuations in narrative and capital flows are evident.
Some of the bullish cases
Bitwise Chief Investment Officer Matthew Hogan released a note on October 7 outlining three drivers of a strong fourth quarter for Bitcoin ETF flows.
The first is platform approval. Hogan cited a report from Morgan Stanley that said its financial advisors and clients could allocate to cryptocurrencies as part of a multi-asset portfolio, suggesting an allocation of up to 4% for risk-tolerant investors.
Morgan Stanley's 16,000 advisors manage $2 trillion. Additionally, Wells Fargo, which manages about $2 trillion in assets, recently allowed its advisors to allocate assets on behalf of their clients.
Hogan noted that while it will take time for the new guidance to be processed across tens of thousands of financial professionals, conversations with advisers indicate serious pent-up demand. He expects meaningful flows in the fourth quarter as these approvals are reflected in allocations.
The second trigger is the degrading trade itself. Gold and Bitcoin will be the best-performing major assets in 2025, with JPMorgan releasing a report on falling trades on October 1st.
Hogan argued that when advisors conduct year-end reviews with clients, they want their portfolios to reflect the year's most successful investments. He added that last year that meant Nvidia and this year it meant gold and Bitcoin. As an advisor to the annual report, he expects strong flows through the end of the year.
The third trigger is price momentum. Bitcoin has surpassed $100,000 and reached an all-time high of over $125,000, rising 9% in the first week of October alone.
Rising prices often lead to increased demand for Bitcoin ETFs as media coverage and investor attention increases. Hogan pointed out that for every quarter that Bitcoin recorded double-digit positive returns, ETFs recorded double-digit billions of dollars in inflows.
Bitcoin ETFs attracted $25.9 billion in net inflows in the first nine months of 2025 and are on pace to reach nearly $30 billion by the end of the year.
This total will fall short of the record high of $36 billion by 2024. Hogan expects fourth-quarter flows to exceed $10 billion, setting a new annual record, due to platform approvals, downgrade trade positioning, and price momentum.
The story of the Fall brings those elements together. $4,000 gold tests currency hedging theory, platform approval expands circulation, Bitcoin price surge attracts attention.
Bitcoin is feeling the same macro pressures that drive gold, and spot ETFs provide a frictionless channel for allocators to express that hedge through digital rails.
As soon as more investors realize this, a new wave of capital could flood into Bitcoin.
