The digital gold narrative in 2020 has begun to boil over, with Bitcoin stealing all the financial media headlines and turning the heads of boomers and hedge funds everywhere for the first time. Recent data from, Bloomberg suggested futures interest and fund flows signaled that the precious metal’s capital had begun pour into crypto.
The same data now shows that weekly gold fund outflows have reached the highest point ever, beating the flight back to cash caused by the end of The Great Recession. Is this a sign of what’s to come, and will the monetary standard that’s lasted throughout history, finally lose its status as the ideal safe haven?
Fund Outflows Demonstrate Strength Of Digital Gold Narrative
Bitcoin is trading at above $19,000 per BTC, while gold is struggling to get back above $1,900 an ounce. The precious metal that has throughout the ages been where investors park their capital they seek to protect, may have finally met its successor in crypto.
Bitcoin is better than gold in nearly every way, is better suited for today’s digital age. The pandemic has only accelerated the digital technology and shone a spotlight on its key benefits.
Gold performs best where investors are uncertain about the economy. There have been few times throughout history where things were as questionable as they are now. And while gold had its day to shine, surging to a new all-time high, the rare yellow metal, has since lost its luster.
Gold has only 20% year-to-date returns to show for a record-breaking rally, while Bitcoin is up well over 150% in the same timeframe. But the gains alone aren’t why gold fund outflows have reached the highest weekly level ever.
Largest weekly outflow from gold ever.
— Dan Held (@danheld) December 6, 2020
Bitcoin Absorbing Precious Metal Capital Is Only Just Beginning
With Bitcoin at just below $20,000, and gold struggling with resistance and seeing record outflows, demand for the precious metal might have peaked. If the leading cryptocurrency by market cap continues to surge and finally breaks the support level it is testing on the XAUBTC price chart, the precious metal could be looking at another 90% fall against BTC.
Each loss of support has resulted in such a drop in the past. The first major breakdown caused a drop of ten BTC per gold bar, to just about parity 1:1 with gold. The rise to $20,000 in 2017, made it so each gold bar was worth just a fraction at 0.1 BTC – which is where the asset is currently and about to begin its break down further.
The gold standard is at risk of being replaced by a Bitcoin standard | Source: XAUBTC on TradingView.com
The recent bullish trend in crypto while precious metals cool down has caused gold bugs to come out in droves to bash Bitcoin. Well known gold bug Peter Schiff attacks crypto every chance he gets, and The Bullion Reserve founder Simon Mikhailovich recently joined in on the fun, comparing the digital gold narrative to “digital steak.”
RELATED READING | BLOOMBERG: FUTURES AND FUND FLOWS SHOW BITCOIN IS REPLACING GOLD
Mikhailovich says it’s nonsense, warns governments will ban Bitcoin, and more. But regardless of these critics, smart money understands that Bitcoin’s market cap remains under $500 billion, and the entire gold cap is somewhere around $10 trillion. Given the scarce BTC supply and simple math, the upside in Bitcoin is enormous compared to gold, which might be on its way out as a monetary standard for the first time in its history.
FEATURED IMAGE FROM DEPOSIT PHOTOS, CHARTS FROM TRADINGVIEW.COM