Bitcoin and gold are in the red this week, but their underlying stories are divergent, with experts suggesting a potential shift in market sentiment.
Precious metal prices have fallen about 10% from their all-time highs over the past six days, marking a sharp reversal after a long rally. In contrast, Bitcoin has shown relative strength, continuing to rise 2% for the week. CoinGecko data.
“Gold's recent decline reflects a partial easing of geopolitical tensions, trade tensions and profit-taking,” said Tim Sun, senior research fellow at Hashkey Group. decryption.
Performance differences caused well-known problems. Relationship between advance and lag This suggests that when gold takes a breather, Bitcoin soars, and vice versa.
Some speculate that the double-digit decline in gold could lead to a bid for Bitcoin.
“A pause in gold’s momentum could give Bitcoin room to rally in a catch-up trade,” said Ryan McMillin, chief investment officer at crypto fund manager Merkle Tree Capital. decryption. Given gold's recent rally, “a rapid rebound should not be the base case,” McMillin added.
Mr. Sun echoed Mr. McMillin's outlook, citing strong returns in U.S. stocks supported by the ongoing AI cycle, and suggested that gold may take longer to consolidate after its recent selloff.
45 years of historical gold data show There were 10 instances where precious metals fell 10% in six days. In all of these scenarios, it took two months for gold to recover from the decline with an average return of 8.39%.
HashKey's Sun does not expect simple capital rotation, as the demand for the two assets is fundamentally different.
“Gold demand is dominated by sovereign wealth funds, central banks and conservative asset managers. In contrast, Bitcoin flows are still largely driven by ETFs and investors with a high risk appetite,” Sun explained.
Looking to the future
Both experts remained bullish on Bitcoin in the short term, as the gold market is solid after a strong run.
McMillin explained that top cryptocurrencies are entering a stage of institutional adoption and liquidity, which could set the next bar even higher.
Sun maintains a cautiously bullish outlook, predicting a “tumultuous uphill path” for gold, supported by “widening global fiscal deficits and a steady drumbeat of risk events.”
Analysts expect Bitcoin to follow a similar “high range” trajectory, supported by a gradual recovery in macro liquidity.
