Bloomberg commodity strategist suggests the recent Bitcoin price growth amid its ETF milestones could actually favor gold.
Following Bitcoin‘s recent $100,000 price milestone, the crypto market is largely optimistic, with most setting their sights on new upward targets. However, amid the wave of excitement, one Bloomberg analyst has offered a different outlook.
Be Careful What You Wish for?
For a long time, Bitcoin proponents have tried to sell the asset to traditional investors as gold, only more liquid and accessible 24/7.
With the launch of spot Bitcoin ETFs in the U.S. in January 2024, this narrative is now taking root. These ETFs have helped push the total value held by global spot Bitcoin ETFs to about $125 billion, closing in on gold’s $225 billion. To be sure, this growth has been a key contributor to Bitcoin’s recent rise.
However, according to a post today from Bloomberg Senior Commodity Strategist Mike McGlone, this growth presents a problem for the oranged-themed digital asset and an opportunity for the traditional store value when looking at ETFs.
Bitcoin's $100,000 Ceiling May Favor Gold, Especially vs. Beta – Bitcoin reached a milestone at $100,000, which might buttress #gold if #ETFs are a guide. Almost $125 billion is tracking the crypto, rapidly approaching the roughly $220 billion for the metal, with a big… pic.twitter.com/MV1lsBwXMB
— Mike McGlone (@mikemcglone11) December 11, 2024
The analyst explained that at current levels, Bitcoin ETFs now offer a similar reward potential and headwinds as gold ETFs but with higher risks as the digital asset remains three times as volatile as the metal. As such, the analyst posits that investors may be more likely to choose gold when forced to pick between the two.
Meanwhile, there are other reasons McGlone believes gold looks promising compared to Bitcoin in the short term.
Bitcoin Overstretched?
In a separate post on Wednesday, Bloomberg’s McGlone highlighted that, unlike gold, Bitcoin’s price action appears to be highly correlated with U.S. equities, which he argued appeared overstretched.
For context, Bitcoin and the S&P 500 have surged to new highs in the month following Donald Trump’s election victory, while gold has declined.
The analyst suggested that investors could flee to the traditional store of value in the possible event of a significant stock market rout.
The analyst drew parallels between current market conditions ahead of the incoming Donald Trump administration and the president-elect’s first time in office. During Trump’s tenure, gold jumped 52% from over $1,200 to over $1,800. Still, the U.S. stock market was no laggard during the time, as the S&P 500 also gained 50%.
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