Author: 137Labs
Original Title: Safe-Haven Funds Repricing: The Logic Behind Gold's Strength and Bitcoin's Divergence
Against the backdrop of rising risk aversion in global markets, the divergence in asset performance has become increasingly evident. Gold has maintained above $5,000 per ounce for the second consecutive trading day, while Bitcoin has shown signs of weakness amid high volatility. Fund flow data indicates that investors are systematically adjusting their risk positioning across different assets.
Over the past week, Bitcoin-related fund products have experienced a cumulative net withdrawal of over $1.3 billion, becoming a significant part of the overall outflow from cryptocurrency ETFs.
Gold Continues Strong Performance, Weak Dollar and Geopolitical Risks Resonate
Driven by factors such as escalating geopolitical tensions, heightened sovereign debt concerns, and a persistently weak U.S. dollar, international gold prices have risen for the seventh consecutive trading day. During the session, gold prices surged by 1.3%, firmly breaking above the $5,000 mark. Meanwhile, silver prices rose nearly 7% in a single day, indicating broad safe-haven demand for precious metals.
Recently, U.S. President Trump has repeatedly issued strong trade and foreign policy statements, including tariff threats and geopolitical remarks, fueling market concerns over policy uncertainty. At the same time, the U.S. dollar index has fallen to a nearly four-year low, with market speculation that the U.S. may intervene in the foreign exchange market to stabilize the yen.
Institutional View: Two Core Pillars of Gold Bull Market Remain
Daniel Ivascyn, Chief Investment Officer and Managing Director at PIMCO, one of the world's largest bond management firms, pointed out that the current gold rally is not driven by short-term sentiment but by deeper structural factors.
He stated that two key factors support gold's long-term performance:
"One is the ongoing rise in global geopolitical tensions, and the other is investors' concerns about high debt levels of governments. As long as these two factors continue to play a significant role in the market, gold may continue to perform exceptionally well in the long run."
From a historical perspective, gold prices have doubled over the past two years and have just recorded their best annual performance since 1979. So far, gold has gained approximately 17% this year, highlighting its defensive attributes in a systemic risk environment.
Volatility Rises Simultaneously, Short-Term Correction Risks Emerge
Despite the strong long-term logic, some market participants remain cautious about gold's short-term outlook.
Stephen Innes, Executive Partner at SPI Asset Management, noted that the market is highly sensitive to Trump's policy direction:
"Today it's tariffs, tomorrow it's geopolitics, and the day after it might involve the Federal Reserve's independence. This recurring uncertainty will inevitably increase short-term market volatility."
Data shows that the implied volatility of COMEX gold futures has risen to its highest level since the early stages of the COVID-19 pandemic in 2020. Meanwhile, the volatility of the world's largest gold ETF, SPDR Gold Trust, also remains elevated.
Ivascyn also warned that precious metals may experience a technical pullback in the short term:
"Recently, precious metals like gold and silver have significantly outperformed other assets, partly due to continued buying by retail investors. The rapid price increase suggests the possibility of a substantial correction in the short term."
Bitcoin Stagnates, Funds Continue to Exit Crypto Market
In stark contrast to gold's sustained strength, Bitcoin has recently hovered around $87,000, with trading volumes remaining sluggish. Since its peak last October, Bitcoin has corrected by approximately 25%, with a 6% decline in the past seven days alone.
In terms of fund flows, investors are accelerating their exit from crypto assets. Data shows that over the past week, Bitcoin-related funds have seen net outflows exceeding $1.3 billion, quickly reversing the brief inflow trend seen earlier this year.
JPMorgan: Cryptocurrency ETFs Face Systemic Outflows
In a recent report, JPMorgan pointed out that in the current market environment, equities and precious metals are attracting large-scale inflows, while cryptocurrency ETFs are under sustained pressure.
The report indicates that broad-based equity ETFs are experiencing one of the largest net inflows in history, while crypto-related ETFs are being continuously reduced by investors, reflecting a clear decline in risk appetite.
Expert Skepticism: Bitcoin Struggles to Serve as Stable Macro Hedge
Stephane Ouellette, CEO and Co-Founder of FRNT Financial Inc., believes the crypto market faces multiple challenges:
"On one hand, artificial intelligence has attracted substantial capital over the past year; on the other hand, cryptocurrencies are being excluded from inflation trades."
This phenomenon has reignited academic discussions about Bitcoin's safe-haven properties. Duke University Professor Cam Harvey stated bluntly:
"Bitcoin is unlikely to replace gold as investors' preferred safe-haven asset."
The analysis team at crypto asset firm Tagus Capital also noted that Bitcoin's hedging effectiveness has significant limitations:
"Bitcoin's returns may respond to loose monetary environments or concerns about fiat currency devaluation, but academic research shows that this hedging effect is sporadic, weaker than gold's, and heavily influenced by risk appetite, liquidity, and equity-like factors."
Conclusion: Safe-Haven Funds Redefining "Safe Assets"
Overall, gold's continued record highs and Bitcoin's weakness are not coincidental but represent a global reassessment of asset safety and stability during periods of high uncertainty.
In the short term, precious metals may maintain relative strength driven by safe-haven demand. For Bitcoin to regain market consensus as a "macro hedge asset," it will need to wait for a recovery in risk appetite and a more stable macroeconomic environment.
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