Gold climbs 2% as Bitcoin slides 20%, challenging safe-haven status

Gold outperformed Bitcoin by more than 20 percentage points in the first week of June, reviving questions about crypto's role as a portfolio hedge.

Bitcoin fell 20% to below $60,000 in the first week of June while gold climbed, the widest divergence between the two assets this year. The S&P 500 posted modest gains over the same period, leaving crypto as the worst-performing major asset class.

Bitcoin suffers from a perpetual identity crisis, Steve Bailey wrote in a CoinDesk opinion column this week, with different investor cohorts treating it as digital gold, a technology proxy or a trading instrument. "Because no shared understanding of what bitcoin fundamentally is has yet taken hold, no consistent framework exists for how it should behave," Bailey said.

BTC tumbled below $60,000 on June 5 for the first time since October 2024, extending its decline from an October peak above $126,000 to 52%. Spot bitcoin ETFs suffered $3.4 billion in outflows as investors rotated into AI-related stocks, while a stronger-than-expected jobs report pushed markets to price in a Federal Reserve rate hike rather than a cut. Ether fell 8% over the week to trade near $1,540, according to CoinGecko data.

The divergence matters because institutional capital, now the marginal price setter for bitcoin, treats it as a liquidity-driven risk asset rather than a hedge. Until a dominant identity converges, bitcoin's price will remain tethered to macro conditions rather than its fixed-supply narrative.

Several headwinds converged to drive the selloff. Strategy, the largest single corporate holder of bitcoin, turned seller for the first time, reversing a multiyear accumulation pattern. The shift added to pressure from persistent ETF outflows, which saw investors pull capital from crypto products to allocate to the artificial intelligence trade and related equities.

The macro backdrop also shifted against risk assets. U.S. job growth blew past forecasts on June 5, with markets now fully pricing the Fed's next move as a rate hike rather than a cut. The Nasdaq fell more than 2% on the day, reflecting a broad risk-off tone that swept across equities and crypto alike.

Bitcoin has now lost more than half its value from the October 2024 peak above $126,000. The next major support level sits at $55,000, a threshold not tested since September 2024, while resistance has formed near $65,000. Open interest across bitcoin futures fell 15% during the week, Coinglass data shows, as leveraged positions were flushed out.

The gold-bitcoin divergence underscores a broader realignment. With the Fed unlikely to ease policy anytime soon and AI stocks drawing speculative capital, bitcoin faces a challenging environment where its fixed-supply narrative offers little protection against liquidity-driven selling.

This article is for informational purposes only and does not constitute investment advice.