Gold Continues Its Pullback—A Boost for Bitcoin?

Main Points:

• Gold prices have retreated nearly 10% from their late‐April highs, testing investor conviction amid easing trade tensions.
• Bitcoin has rallied roughly 10% over the same period, approaching two‑month highs near $97,000.
• Strategic reallocations into digital assets are underway: Bitcoin ETF inflows now outpace those into gold ETFs by their widest margin since November 2024.
• Standard Chartered forecasts Bitcoin could climb to $120,000 by the end of Q2 on continued ETF demand.
• Market risks: potential U.S. rate cuts, renewed trade‐policy uncertainty, and geopolitical events may determine whether gold stabilizes or Bitcoin extends its lead.

1. Gold’s Recent Correction

After surging to an all‑time peak of $3,500.05 per ounce on April 22, gold has given back almost 10%, slipping to around $3,232 by May 1 amid profit‑taking and improving risk appetite . Recent U.S. data signaling a slowdown in growth, coupled with President Trump’s hints at tariff rollbacks, have dented gold’s safe‑haven appeal. According to Kitco, gold futures shed over $100 in early U.S. trading on May 1 as investors rotated into equities.

Despite the pullback, gold remains up roughly 30% from November lows, driven earlier by fears over U.S.–China trade escalation, rising inflation expectations, and geopolitical conflicts. Central bank buying and retail demand—particularly in Asia—also underpinned the rally before this consolidation phase.

2. Bitcoin’s Counter‑Trend Rally

In contrast to gold’s downturn, Bitcoin (BTC) has climbed approximately 10% over the same timeframe, trading near $97,000 on May 1—its highest level in two months. The cryptocurrency’s resilience reflects growing institutional acceptance and the proliferation of spot Bitcoin ETFs in the U.S. Notably, last week saw $3.4 billion flow into crypto ETFs—one of the three largest weekly inflows on record—with Bitcoin funds capturing the lion’s share.

Investors are increasingly viewing Bitcoin as a superior hedge to gold amidst strategic asset reallocation out of U.S.‐dominated paper assets. This shift was highlighted by Geoffrey Kendrick, Head of Digital Assets Research at Standard Chartered, who noted that ETF inflows into Bitcoin have now surpassed those into gold by over $4 billion—the biggest gap since the week of the U.S. presidential election in November 2024.

3. ETF Flows: The Story Behind the Numbers

ETF flows serve as a window into investor sentiment. In Q1 2025, gold ETFs witnessed record inflows of 552 metric tons—up 170% year‑over‑year—yet holdings in major funds like SPDR Gold Trust have recently declined, signaling profit‑taking. Conversely, spot Bitcoin ETFs have drawn cumulative inflows exceeding $15 billion since their approval, with last week’s $3.4 billion injection marking the third‑largest weekly haul ever.

Standard Chartered’s Kendrick argues that these divergent flows reflect a fundamental repricing of Bitcoin as the premier digital safe haven. “We believe Bitcoin is outperforming gold as a hedge against strategic asset reallocation out of the U.S.,” he stated, forecasting a $120,000 Bitcoin price by Q2’s end under sustained ETF momentum.

4. Drivers of the Divergence

Several factors underpin Bitcoin’s recent strength relative to gold:

1. ETF Accessibility: Direct access to regulated spot Bitcoin ETFs has lowered barriers for institutional and retail investors, steering fresh capital into crypto.
2. Scarcity Narrative: Bitcoin’s fixed supply of 21 million coins contrasts with gold mining realities and potential increases in central bank selling.
3. Technological Adoption: Growing acceptance of blockchain for payments, DeFi, and corporate treasury diversification bolsters Bitcoin’s utility beyond pure speculation.
4. U.S. Policy Dynamics: Anticipated Federal Reserve rate cuts later in 2025 and potential tariff adjustments reduce the urgency for gold hedges, shifting focus to higher‑beta assets like Bitcoin.

5. Potential Catalysts and Risks

Looking ahead, several developments could sway the gold‑vs.‑Bitcoin narrative:

• Federal Reserve Decisions: If the Fed delivers rate cuts as priced in for later this year, gold may recover some lost ground—but looser policy could further fuel risk‑assets like Bitcoin.
• Trade and Geopolitical Shifts: Any resurgence in U.S.–China tensions, Middle East volatility, or emerging sanctions could reignite gold’s haven bid—and possibly send Bitcoin even higher if viewed as a non‑governmental store of value.
• Regulatory Clarity: Positive regulatory moves—such as expanded ETF approvals in Europe or clearer tax frameworks—could boost Bitcoin inflows further. Conversely, crypto crackdowns could trigger sharp corrections.
• Technological Upgrade Cycles: Upcoming Bitcoin network upgrades (e.g., scalability improvements, Taproot adoption) and wider Web3 integration may enhance confidence and drive adoption.

6. What Traders Should Watch

• ETF Flow Reports: Weekly data from providers like CoinShares and Bloomberg Intelligence will reveal whether the current gap between Bitcoin and gold flows widens or narrows.
• On‑chain Metrics: Network activity—such as transaction volumes, active addresses, and futures open interest—can signal strengthening or weakening momentum.
• Macro Indicators: U.S. inflation prints, labor market reports, and Fed communication ahead of June’s policy meeting will be key for both gold and Bitcoin positioning.
• Technical Levels: Psychologically significant levels—$100,000 for Bitcoin and $3,300 – $3,350 for gold—may act as support or resistance zones in the near term.

Conclusion

Gold’s recent near‑10% pullback from record highs has opened a window for Bitcoin to shine. With strategic asset reallocations favoring digital over traditional safe‑haven assets, Bitcoin’s ETF‑driven inflows have eclipsed those of gold by the widest margin since late 2024. If this trend endures, Standard Chartered’s bold $120,000 price target for Bitcoin by Q2 end may prove prescient. Yet, market risks—from Fed policy shifts to renewed geopolitical strife—could quickly recalibrate the landscape, restoring gold’s allure or further elevating Bitcoin’s status as the “digital gold.” Traders and investors should closely monitor ETF flows, macroeconomic signals, and on‑chain data to navigate this evolving dynamic between two of the world’s most prominent hedging instruments.