Record gold outflow 'isn't going into ripples' — only Bitcoin, says fund manager

Monday 30 November 2020, 8:16 PM AEST - 1 month ago

The ongoing Bitcoin (BTC) rally has primarily been driven by institutions, analysts say, with metrics such as CMEs open interest and Grayscales assets under management (AUM), supporting this narrative.

At the same time, the gold market has seen large outflows in recent weeks. On Nov. 24, independent financial researcher Jan Nieuwenhuijs reported that gold saw its largest weekly outflow in history.

— Jan Nieuwenhuijs (@JanGold_) November 23, 2020

The timing of the heightened level of outflows from the gold market is noteworthy because it comes after the entrance of major institutional investors into the Bitcoin market.

Cointelegraph reported that Guggenheim Partners, which manages $275 billion in assets, is the latest institution to show interest in Bitcoin.

What does this mean for Bitcoin?

In the medium to long term, the inflow of institutional capital into Bitcoin could lead to two key trends.

First, Bitcoin could see a more sustained uptrend that has emerged since September. Institutions, especially those gaining exposure to BTC through the Grayscale Bitcoin Trust, are likely accumulating BTC with a long-term strategy.

Some long-time Bitcoin investors, who had gold positions for prolonged periods, have also started to allocate their capital fully into BTC. Raoul Pal, the CEO of Real Vision Group, said:

Ok, last bomb - I have a sell order in tomorrow to sell all my gold and to scale in to buy BTC and ETH (80/20). I dont own anything else (except some bond calls and some $'s). 98% of my liquid net worth. See, you can't categorize me except #irresponsiblylong Good night all.

Second, fund managers say that this could make Bitcoin even more dominant in the cryptocurrency market. Currently, the market cap of Bitcoin accounts for 63.83% of the global cryptocurrency markets valuation.

Bitcoin dominance index. Source: Coinmarketcap

Kyle Davies, the co-founder at Three Arrows Capital, one of the largest funds in the cryptocurrenc ...

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