- BTC will face competition from the alternative 10X opportunities.
- BTC ETFs have recovered in Q2 from outflows to over $10B in net inflows.
Bitcoin [BTC] jumped from $40K to $75K on U.S. spot ETF approval and later climbed above $100K amid regulatory relief under the pro-crypto Trump administration.
But the asset may still face future challenges, according to Bitwise CEO Hunter Horsley.
He highlighted the double obstacles as competition from alternative 10x opportunities and ‘fading’ digital gold narrative amongst institutional investors.
“These two aren’t the most pressing items of this moment, but they will reveal themselves as the next obstacle over the coming quarters.”
Source: Hunter Horsley/X
Bitcoin ETF inflows outpace gold
In the meantime, BTC has enjoyed relative demand from institutional investors in Q2 compared to gold. According to ETF inflows across the two hedge assets, in Q2, gold ETF demand dropped 40% from $30B to $15B.
On the contrary, BTC ETFs recovered from $3.3B outflows to nearly $10B inflows as of press time.
Horsley added that BTC won’t compete with gold, as both attract investors’ attention in the future because they are ‘apolitical stores of value (SoV).’ But T-bills and bonds will be the new BTC rivals.
“Rather, I think Bitcoin’s competition is going to end up being U.S. Treasuries and other governments’ bonds (eg, UK gilts): the ultimate *political* SOVs.”
On investors’ returns, however, BTC had a head start from April and outperformed gold by 34%.
However, gold has outpaced BTC by 10% since mid-May, per the BTC/gold ratio, an indicator tracking BTC’s relative price performance against gold.
Source: BTC/Gold ratio, Trading View
This week alone, the ratio only surged 1.5%, suggesting BTC held relatively better against gold during Middle East tensions.
In fact, on a year-on-year (YoY) basis, BTC has surged 58%, offering investor returns higher than the S&P 500 Index’s 11% or gold’s 46%. If the ratio extends its rally to 40, then BTC would offer better returns than gold.
