Here’s why the debasement trade is boosting bitcoin price more than gold price – StoneX’s Cincotta

(Kitco News) – Bitcoin's recent breakout coincided with the U.S. Treasury’s bond buyback announcement, and while gold ETF demand remains strong, higher-for-longer Fed rate expectations are capping the non-yielding metal’s gains, according to Fiona Cincotta, Senior Market Analyst at StoneX.

“August the 19th was an important turning point for bitcoin, coinciding with the US Treasury Department announcing plans to increase buybacks for long dated government bonds,” Cincotta said in a recent video analysis. “Bitcoin's fortunes appeared to change dramatically around the same time. On that date the price broke above $65,000, subsequently rising to this week's high of $87,000. That's a 35% increase.”

Cincotta also pointed out that over the same period, U.S. bitcoin ETFs also saw around $4.6 billion in net inflows, pushing bitcoin ETFs into positive territory for the year. “Bitcoin is up 44% so far this quarter,” she said. “This contrasts with other major assets quite sharply. Stocks have gained around 3.5% across the same period, whilst gold is up only 8%.”

She cautioned, however, that this is not a case of investors abandoning gold. “If we look at gold ETF demand, that has also remained exceptionally strong, with the August recording the second largest monthly global ETF inflows on record,” Cincotta said. “Gold, however, does face a more challenging backdrop from renewed expectations that the Federal Reserve could remain hawkish for longer. The higher for longer interest rate expectations and elevated Treasury yields increase the opportunity cost of holding a non-yielding asset such as gold, and that's really limiting the upside to the precious metal despite continued demand that we're seeing.”