Key Takeaways
- Bitcoin ETFs have experienced inflows of $839 million, contrasting sharply with gold ETFs that saw outflows of $4.1 billion.
- Historical data suggests a potential 8.3% rebound for gold following significant corrections.
- Bitcoin remains technically supported and is projected by some analysts to reach $150,000 by the end of the year.
Gold’s recent downturn is happening as its digital counterpart, Bitcoin (BTC), regains momentum. After reaching a record high above $4,381, gold has experienced a notable retreat, dropping over 10.60% to a low of $3,915. This marks its steepest seven-day decline since April.
This correction in gold occurs simultaneously with a nearly 6.70% increase in Bitcoin’s price. The divergence is notable, especially as the United States and China appear to be progressing toward a trade agreement. This shift follows remarks from Donald Trump about a positive meeting with Xi Jinping, which included an immediate reduction in fentanyl tariffs from 20% to 10%.
With improved market sentiment and a heating cryptocurrency market, this correction in gold below the $4,000 support level could indicate a rotation of funds back into Bitcoin.
Bitcoin ETFs Attract Significant Inflows Amidst Gold’s Decline
US-listed Bitcoin ETFs have seen substantial net inflows totaling $839 million since gold’s record high on October 20th. Holdings have increased consecutively over the last four trading sessions, according to data from Farside Investors.
In contrast, gold-backed ETFs experienced total outflows of approximately 1.064 million ounces, equating to nearly $4.1 billion, since October 22nd, as reported by Bloomberg data. This period included the largest single-day withdrawal of gold exposure in over six months on Monday, with investors removing 0.448 million ounces.
Bitcoin’s Technical Strength and Price Outlook
Technical analysis for BTC indicates a strong support level near $101,790.
This level aligns with the 20-week exponential moving average (20-week EMA) and the 1.0 Fibonacci retracement level. Maintaining price above this confluence of support increases the likelihood of BTC potentially reaching $150,000 by the end of the year.
Analysts at JPMorgan have forecasted that the BTC price could reach $165,000 in 2025, viewing Bitcoin as currently undervalued relative to gold.
Analyst Views on Gold’s Underlying Strength
Despite the recent correction, gold remains up approximately 50% year-to-date. Its performance has been supported by record central bank purchases, persistent fiscal imbalances, and the ongoing debasement trade, where investors seek hedges against rising government debt and weakening fiat currencies.
Metal trader David Bateman suggests that gold’s bull market remains fundamentally intact, even with the current price correction.
Technical indicators also suggest that gold is undergoing a bull market correction rather than a trend reversal. The metal continues to hold firm above its 50-day exponential moving average (50-day EMA).
Historically, gold has rebounded from its 50-day EMA support level in the past two years, with previous rebounds ranging from 4% to 33%.
Furthermore, gold’s past 10% corrections over the last three decades have historically led to sharp rebounds within days, indicating a potential short-term bottom rather than sustained downward movement.
Data highlighted by Sabu Trades shows that previous instances of such steep price drops have typically resulted in positive returns within two months, averaging an 8.3% recovery.
If this historical pattern continues, gold could retest its record highs in the $4,200–$4,250 range by December, reinforcing its broader uptrend. HSBC has set a target of $5,000 for gold in 2026, contingent on the metal holding above the 50-day EMA.
Market Insights
In summary, recent market movements show a significant shift in investor preference, with Bitcoin ETFs attracting substantial inflows while gold ETFs experience considerable outflows. This trend coincides with an improving global economic outlook due to progress in US-China trade relations.
Despite a temporary pullback, technical analysis suggests Bitcoin is well-supported, with projections of reaching $150,000 by year-end. Meanwhile, analysts believe gold’s current correction is likely a phase within a larger bull market, supported by fundamental economic factors and historical price patterns that suggest a potential rebound.