- 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 are constantly underperforming the broader stock market. Gold dropped to a low of $4,025, its lowest point since November last year, down by 28% from its highest point in January.
Gold, silver, and Bitcoin Prices Have Plunged This Year
Bitcoin price was trading at $63,120 today, June 11, down by 50% from its highest point in October last year. Silver has slumped to $63.71, down by nearly 50% from the year-to-date high. These crashes have all erased billions of dollars in value.
Gold, silver, and Bitcoin prices have plunged this year | Source: TradingView
There are a few reasons why silver, gold, and Bitcoin have plunged this year. The main one is that their demand have 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 separate AI stocks like Sandisk and Micron have soared by triple digits.
A good way to look at this is in terms of 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.
READ MORE: Here’s Why Oracle Stock Crashed After Earnings: Is it a Buy?
The same trend is happening in the crypto industry, where the spot Bitcoin ETFs have lost $2 billion this month after they lost $2.4 billion last month. On a net basis, these funds have lost over $3 billion in assets. These numbers suggest that there have been a rotation from Bitcoin, gold, and silver to the stock market.
On the positive side, this rotation means that the reversal may happen 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 the strong US jobs numbers last week, and the high consumer inflation this week, analysts are predicting that the Federal Reserve will hike interest rates later this year. A Polymarket poll shows that investors anticipate that the bank will deliver a rate hike this year, which explains 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 had an impact on gold prices. For example, some central banks like Turkey and Russia have sold their gold reserves this year to prop up their economies.
READ MORE: Bitcoin Mining Companies Pivot to AI Boom Amid Crypto Crash as Short Interest Jumps
