Despite both hitting previously unheard-of price levels, investor sentiment in Bitcoin ETFs indicates a rising preference for the cryptocurrency over conventional gold.
Despite both hitting previously unheard-of price levels, investor sentiment in Bitcoin ETFs indicates a rising preference for the cryptocurrency over conventional gold.
Although gold and bitcoin are frequently viewed as hedges against inflation and valuable assets, there has been a noticeable shift in investor behaviour this year. According to recent data, withdrawals from gold exchange-traded funds (ETFs) have totaled almost $4.6 billion.
On the other hand, $8 billion in net investments were made in Bitcoin ETFs that the SEC approved on January 11—a record debut for the financial instruments.
Because of their non-yielding characteristics, investors have begun to compare Bitcoin to physical assets such as gold. This comparison has gained momentum, particularly in light of the low interest rates that were recorded during the Covid epidemic.
Current patterns indicate that gold's price swings are more influenced by expectations of changes in monetary policy, political unrest throughout the world, and worries about possible downturns in the equity market.
On Tuesday, the price of bitcoin surged to its highest level in more than two years, however the high was fleeting. The price of the cryptocurrency dropped by almost 6% after hitting $69,191, as investors took advantage of the year's large gains, which totaled over 60%.
In the meantime, gold is still trading close to its all-time high of $2,141, illustrating the divergent levels of investor confidence in the two assets in the face of market volatility.
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