Bitcoin Slumps as Gold Rallies; Strategy Halts Buying Spree
Bitcoin extended its decline on Thursday even as gold rallied and the Nasdaq gained, with the absence of large-scale purchases by Strategy leaving the market vulnerable to ETF outflows.
Bitcoin slumped further on Thursday, diverging from a rally in gold and the Nasdaq, as the absence of large-scale purchases by Strategy left the cryptocurrency market exposed to persistent ETF outflows. The decline came despite a weaker U.S. dollar and falling Treasury yields, which typically support risk assets. The inverse correlation between the dollar index (DXY) and risk assets was evident, but bitcoin failed to benefit, unlike gold which strengthened as the dollar softened. Real US 10-year yields also declined, historically a bullish signal for gold, further explaining the metal's outperformance.
Bitcoin's price weakness has been exacerbated by a lack of buying from Strategy, the corporate bitcoin holder formerly known as MicroStrategy. The company has been an intermittent buyer this year, with seven weeks of purchases exceeding $1 billion, including three weeks above $2 billion. However, its recent pause has removed a key support for prices, allowing ETF outflows to drive the sell-off. For gold and precious metals traders, this divergence highlights gold's continued appeal as a safe haven amid crypto volatility, with NowPrice live gold prices and charts showing the metal's resilience. Central banks have been net buyers of gold since 2022, diversifying reserves away from the dollar, which adds a structural bid. Additionally, gold ETF flows, such as those tracked by GLD and IAU, have seen renewed interest, contrasting with bitcoin ETF outflows. Jewelry demand, particularly from India and China, also remains robust, while investment demand via bars and coins is supported by geopolitical uncertainty.
Looking ahead, traders will watch for any resumption of Strategy's buying activity, as well as broader macroeconomic cues such as Fed policy signals and inflation data. The ongoing ETF outflows suggest institutional sentiment toward bitcoin remains cautious, while gold's rally underscores its status as a preferred hedge in uncertain times. Key levels to monitor include the COMEX-LBMA spread, which can indicate physical delivery stress, and real yield movements. If the Fed signals a pause in rate cuts, gold may face headwinds, but persistent central bank buying and geopolitical risks could keep the metal supported. Bitcoin, meanwhile, needs a catalyst such as renewed corporate buying or a shift in ETF flows to regain momentum.