Over the past week, investors have pulled more than $13 billion from Bitcoin-related funds, contributing to an overall withdrawal from cryptocurrency ETFs. Gold has held above $5,000 for a second consecutive day, sustaining positive sentiment, although some analysts have warned of short-term correction risks. Amid a broader shift where investors are turning to precious metals and equities to hedge against inflation risks, the trading logic for cryptocurrencies has been disrupted, and their investment value is increasingly being questioned by the market.

Gold has maintained its position above $5,000 per ounce for a second day. Driven by geopolitical risks and investor selling of sovereign bonds and currencies, a weaker U.S. dollar has helped push gold prices higher, with the metal rising as much as 1.3% today and marking a seventh straight session of gains, extending its strong upward trend. Former U.S. President Donald Trump's threat to raise tariffs on South Korean goods contributed to the dollar falling to its lowest point in nearly four years, amid market speculation that the U.S. might intervene to help Japan support the yen. Silver prices also climbed nearly 7%. Gold prices have more than doubled over the past two years, underscoring its status as a gauge of market fear. After posting its best annual performance since 1979, gold has climbed another 17% year-to-date, largely attributed to the so-called "debasement trade," where investors sell sovereign currencies and government bonds. A massive sell-off in the Japanese bond market serves as the latest example of investors rejecting massive fiscal spending. Daniel Ivascyn, Group Chief Investment Officer and Managing Director at PIMCO, stated that two main factors are currently supporting the gold bull market: rising global geopolitical tensions and significant investor concern over the high debt levels of governments worldwide. "As long as these two factors continue to play a key role in the market, gold has the potential to perform exceptionally well over the long term," he said. Stephen Innes, Managing Partner at SPI Asset Management, noted, "In the short term, Trump's series of actions continue to unsettle the market. Threatening to annex Greenland one day, militarily intervening in Venezuela the next, and possibly attacking Federal Reserve independence the day after. These recurring messages will absolutely cause short-term market volatility, as traders may trade against the trend or follow the momentum." Previously, over the past weekend, Trump had also threatened Canada with 100% tariffs, followed by a warning to South Korea. However, volatility in gold prices has also intensified. The implied volatility for COMEX gold futures has climbed to its highest level since the peak of the COVID-19 pandemic in March 2020. Volatility for the SPDR Gold Trust, the world's largest gold ETF managed by State Street, has also breached elevated levels. Ivascyn further commented, "In the recent period, we have seen gold, silver, and other precious metals significantly outperform other assets. But these precious metals might experience a price pullback in the short term because, besides strong demand from global central banks, many retail investors have also been actively increasing their gold holdings in their portfolios over the past period. Therefore, we believe gold prices may be somewhat overextended, or have risen too quickly, so a short-term pullback is possible, and the magnitude could be significant." Additionally, while the market widely expects the Federal Reserve to pause rate cuts this week, investors are simultaneously awaiting Trump's nomination for the next Fed Chair. If the successor adopts a more "dovish" stance, market expectations for rate cuts this year would be revised upward, which would represent a new positive catalyst for gold.

While gold continues to hit new highs, Bitcoin, the cryptocurrency hailed as a momentum trading and "currency debasement" tool, has seen its price stagnate around $87,000, accompanied by weak trading volume. Since last October, Bitcoin has fallen 25%, including a 6% drop in just the past seven days. Consequently, long-term Bitcoin holders are shifting towards more reliable markets like stocks and precious metals. Data compiled by media sources shows that over the past week, investors have withdrawn over $13 billion from Bitcoin-related funds, part of a broader outflow from cryptocurrency ETFs. These outflows, occurring after a brief period of inflows in early January, indicate a rapid shift in market sentiment following the new year. Currently, as investors seek safe havens to hedge against geopolitical risks and a weaker dollar, the precious metals market is attracting substantial inflows. Equities, particularly technology and small-cap stocks, have also continued to rise this year. A report released by J.P. Morgan last week stated that broad-based equity ETFs are experiencing their largest inflows on record, while cryptocurrency ETFs are facing outflows. Stephane Ouellette, CEO and Co-Founder of FRNT Financial Inc., remarked, "The cryptocurrency market is undoubtedly going through a tough period. There are numerous competing factors in the crypto space currently: from an innovation perspective, artificial intelligence (AI) has attracted massive investment over the past year. Simultaneously, cryptocurrencies are currently excluded from the inflation trade." This has reignited doubts about Bitcoin's status as a macro hedge. Professor Cam Harvey of Duke University wrote, "It is unlikely that Bitcoin will replace gold as investors' preferred safe-haven asset." An analyst team at cryptocurrency firm Tagus Capital recently reached a similar conclusion, stating, "Bitcoin's returns may respond to factors beyond inflation, such as loose monetary conditions and concerns about fiat currency debasement, but academic research shows this hedging effect is episodic, weaker than gold's, and heavily influenced by risk appetite, liquidity, and equity-like factors, rather than exhibiting a stable relationship with a weak U.S. dollar."