Investors are turning their backs on gold as its digital rival Bitcoin takes first place in the race among the hottest inflation and depreciation hedges.
Data collected by the Commodity Futures Trading Commission shows a decline in hedge fund interest in the precious metal as the focus shifts to rising nominal yields and the prospect of a better-than-expected US economic recovery.
Accordingly, the net long positions in Comex gold futures in the week ending February 9th fell 1.7 percent to 134,733
At the same time, the data also shows a decrease in short positions in gold futures by 2,191 contracts to 47,093. The survey period saw an uptrend in the price of gold trying to break the resistance level of $ 1,850 an ounce.
Nevertheless, the market lacked sufficient upward momentum, which resulted in the precious metal correcting downward in subsequent sessions.
Bitcoin Pro ( how to buy Bitcoins via instant transfer ) performed better than the traditional safe haven asset. Net long interest in the BTCUSD instrument rose from 12,267 on January 27 to 28,666 on February 11.
Meanwhile, short contracts for the same pair rose from 1,267 to 1,873 over the same period, according to DataMish.com.
The BTC / USD exchange rate rose from $ 29,000 to as high as $ 48,912 amid hopes for booming institutional adoption – led by Tesla’s $ 1.5 billion investment and Mastercard and BNY Mellon’s announcement to launch crypto-enabled services later this year.
According to a report by „Bloomberg Intelligences Senior Commodity Strategist“ Mike McGlone, investors converted part of their gold capital to speculate on Bitcoin, which led to a decline in demand for the precious metal and an increase in the case of the benchmark cryptocurrency.
As evidence, McGlone cites two metrics: the Grayscale Bitcoin Trust and the gold-tracking exchange-traded funds. The former grew from 1 percent to 10 percent of the $ 210 billion tracking gold ETFs in 2020, suggesting a massive outflow of capital from the precious metals market to cryptocurrency.
„In a world that is going digital,“ says McGlone, „it is logical to expect that more funds will flow towards Bitcoin and away from precious metals.“