Investors Plow $7 Billion Into Gold, Bitcoin ETFs

Over five U.S. trading days, investors directed about $7 billion into exchange-traded funds tied to gold and Bitcoin. SPDR Gold Shares (GLD) received roughly $3.4 billion and BlackRock’s iShares Bitcoin Trust (IBIT) about $1.5 billion. GLD holds more than $150 billion and IBIT about $60 billion in assets.

Eric Balchunas, an ETF analyst, called the combined inflow a record for the pair and noted IBIT’s year-to-date flows returned to positive territory after earlier outflows.

During the buying, Bitcoin traded above $80,000 and gold was above $4,600 an ounce. Charlie Morris, founder of ByteTree, observed both assets have upward-sloping 200-day moving averages and carry the firm’s strongest bullish reading, while the dollar registered the weakest score.

Market participants linked demand to pressure on U.S. public finances, strains in Treasury markets and a softer dollar. On Aug. 19, the Treasury raised the maximum size for liquidity-support buybacks of longer-dated securities to $4 billion per operation. U.S. public debt is above $40 trillion.

Bitwise Chief Investment Officer Matt Hougan argued, “A 60/40 portfolio is 100% exposed to fiat currency,” and said some investors are seeking a modest source of diversification. Strive Chief Executive Matt Cole described the trend in scarcity terms, noting that “dollar debasement expands the pool of capital searching for limited-supply assets.”

Analysts at Bernstein noted the long decline in interest rates appears to have ended as sovereign debt burdens reached record levels, creating a trade-off for policymakers between fiscal tightening and other options. Bernstein said that could increase interest in assets with fixed or limited supply and estimated about 60% of Bitcoin is held by investors who remained through past declines of more than 50%.

BlackRock published analysis suggesting a 1% to 2% allocation to Bitcoin could have improved the risk-adjusted performance of a traditional 60/40 portfolio in historical simulations. Analysts also pointed out that gold has a longer record as a defense against monetary and fiscal shocks while Bitcoin remains more volatile and has a shorter history as a store of value.

Together GLD and IBIT accounted for about 70% of the combined inflows tied to the so-called debasement trade, concentrating demand in the dominant ETFs for each market.

Market participants said the coming weeks will test whether the flows mark a sustained change in portfolio allocations or a short-term response to recent moves in yields and the dollar. They noted a stronger dollar or higher real yields could reduce demand for Bitcoin ETFs, while gold’s longer history as a protective asset could support its gains.