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The price of gold increased by 3% between May 29 and June 2, reaching its highest level in more than three weeks, while Bitcoin (BTC) has more than $ 105,000.
The lower dollar forces investors elsewhere
Although this short-term underperformance may seem negative at first glance, several macroeconomic indicators suggest that Bitcoin could break out earlier than expected.
The US dollar index (DXY) fell to its lowest level in six weeks, reporting that investors reduce their exposure to the American currency. As a general rule, this trend reflects the decline in confidence in the monetary policy of the federal reserve and / or increasing concerns concerning the sustainability of the debt of the American government.
The American secretary of the Treasury, Scott Bessent, said on May 1 on May 1 that the country “will never be lacking”, adding that “we are on the warning track”.
These remarks occurred after the CEO of JPMorgan Chase, Jamie Dimon, brought alarms following a bill of the House of Representatives offering an additional increase of 4 billions of dollars to the debt ceiling.
A weaker index encourages holders of the $ 31.2 Billions of US federal debt in progress to request yields elsewhere. While fixed income investments provide predictable yields, the value of the US dollar remains volatile. If currency -based investments offer better yields, capital is likely to move away from the dollar.
The United States has incentives to diversify gold reserves
Despite the attraction of Gold, there are a few factors that could limit the demand of investors. The American government is the largest holder of precious metal, which means that the treasure could sell part of its reserves to strengthen its budgetary position. The acquisition of part of its debt, in particular long -term bonds, would probably increase the US dollar.
Even if the United States had to sell 17% of its gold reserves, which is equivalent to $ 171.8 billion at current prices, it would still lead to a global classification by a wide margin of more than 100%. However, although substantial, this amount will only cover about three weeks from the federal deficit, which makes the effort relatively ineffective.
In relation: Blockchain Group adds $ 68 million in Bitcoin to corporate cash flow
On the other hand, an investment of $ 171.8 billion in Bitcoin would firmly establish American domination in the asset, easily exceeding the estimated China assets of 190,000 BTC. More importantly, this scenario is already plausible following the signing of the strategic decree of the reserve of the Bitcoin reserve by President Donald Trump in March 2025.
Although the United States has the world’s largest gold reserves, it is not one of the first four producers. The data from the World Gold Council classifies China, Russia, Australia and Canada as the main gold producing countries. Consequently, the United States is little encouraged to promote the rise in gold prices, especially during current trade disputes and increased geopolitical tensions.
ETF flows show less confidence in the rise in gold
In addition, the data shows the net outflows of the funds (ETF) negotiated on the Gold Stock Exchange despite the recent increase in prices, while the Bitcoin ETF have recorded $ 3 billion at the entrances since May 15.
Gold has become an asset class of $ 22.7 billions of dollars, which makes it less attractive compared to alternative stocks and investments. On the other hand, the market capitalization of 2.1 billions of dollars of Bitcoin suggests an important place for growth.
Rather than positioning yourself as a direct competitor, Bitcoin is gaining ground while concerns are mounted about the budgetary stability of the United States government – something that also feeds the rise of gold.
This article is for general information purposes and is not intended to be and must not be considered as legal or investment advice. The points of view, the thoughts and opinions expressed here are the only of the author and do not reflect or do not necessarily represent the opinions and opinions of Cointellegraph.
