- Bitcoin price crashed and moved slightly below $60,000 last weekend.
- Gold and silver have plunged by double digits from their highest points on record.
- The retreat is because of the ongoing rotation towards the stock market.
Gold, silver, and Bitcoin prices have plunged this year and have consistently underperformed the broader stock market. Gold dropped to a low of $4,025, its lowest level since November last year, down 28% from its January high.
Gold, silver, and Bitcoin Prices Have Plunged This Year
Bitcoin was trading at $63,120 today, June 11, down 50% from its high last October. Similarly, silver has fallen to $63.71, which represents a nearly 50% decrease from its high earlier this year. These declines have collectively erased billions of dollars in value.
There are a few reasons why silver, gold, and Bitcoin have plunged this year. The main one is that their demand has waned as investors have turned their focus on the booming stock market amid the artificial intelligence (AI) boom.
Besides, the Nasdaq 100 Index has jumped by 20% this year, while some AI stocks, like SanDisk and Micron, have soared by triple digits.
A good way to look at this is through ETF inflows. Data shows that stock ETFs have had over $1 trillion in inflows this year, with the Vanguard S&P 500 ETF (VOO) crossing the $1 trillion mark. Instead, SPDR Gold ETF (GLD) has shed over $7.7 billion in assets this year. The iShares Gold Trust (GLD) has lost over $2.3 billion in assets.
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The same trend is happening in the crypto industry, where spot Bitcoin ETFs have lost $2 billion this month after losing $2.4 billion last month. On a net basis, these funds have lost over $3 billion in assets. These numbers suggest a shift from Bitcoin, gold, and silver to the stock market.
On the positive side, this rotation suggests the reversal may occur later, once the stock market rally ends. When this happens, investors will likely rush to buy the dip in assets that have underperformed the market this year.
Macro Factors Have Contributed to the BTC, XAU, and XAG Crash
Macro factors have contributed to the ongoing weakness. Following the release of strong US jobs numbers last week and high consumer inflation this week, analysts predict the Federal Reserve will hike interest rates later this year.
A Polymarket poll shows investors expect the bank to deliver a rate hike this year, which helps explain why US bond yields have jumped. This also explains why the stock market has pulled back in the past few days.
The upcoming SpaceX IPO is also dragging gold, silver, and Bitcoin prices, as a top analyst at Panmure Liberum said:
“It is a potential drag on gold, because investors are looking somewhere else to keep the party alive. Gold is struggling at the moment, and they are looking at the next big thing. And SpaceX is the next big thing.”
Other external factors have affected gold prices. For example, some central banks, such as Turkey and Russia, have sold their gold reserves this year to prop up their economies.
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