Why a Gold Rotation Could Be Signaling a Bitcoin Bottom

Bitcoin may not be out of the woods yet, but one of the market voices closely watching flows across crypto and macro says the case for a bottom is finally getting stronger.

That is the view from FalconX Global Co-Head of Markets Joshua Lim, who joined Coinage as investors try to make sense of a market being pulled in multiple directions at once: Jerome Powell downplaying the “stagflation” fears hanging over Wall Street, fresh geopolitical volatility tied to Iran, gold pulling back, and crypto trying to find its footing after a bruising selloff.

For Lim, the more important question is not whether Bitcoin has suddenly become immune to macro. (It hasn't.) The bigger shift is that some of the pressures that had weighed on crypto earlier in the year appear to be reversing at the same time new sources of demand are showing up. In his view, that mix is helping explain why Bitcoin has managed to rebound off its lows — and why some investors now see the asset beginning to bottom.

“I think crypto is in a weird spot,” Lim told Coinage in a new interview. “The one chart we have constantly up on our screens is the Bitcoin:gold ratio. I's a relative demand for these these two stores of value."

Gold has strongly outperformed Bitcoin this year, but after the mid-way point in March thing appear to be changing.

Lim’s read is that Bitcoin’s rebound is being driven by at least three overlapping forces. The first is positioning. Earlier this year, he said, being long gold and short Bitcoin had become a popular expression for macro funds and other investors looking for a safer hedge amid global uncertainty. But that trade now appears to be unwinding.

The second is fresh fuel from Michael Saylor’s Strategy and its increasingly aggressive capital raises tied to Bitcoin exposure. And the third is something harder to model, but just as important: crypto-native buyers who had been sitting on the sidelines are starting to step back in.

“I think now where we’re at is a lot of those positioning elements have kind of disappeared," Lim said. “Post Iran War, I think you’ve seen a bit of a squeeze up in the short crypto trade.”

That is not the same thing as calling for a straight line higher. Lim was careful not to pretend Bitcoin has fully escaped the macro regime still dominating most asset classes. As he pointed out, when gold is getting hit and broader risk assets are wobbling, Bitcoin is still likely to feel some of that pressure too. But in his view, the more revealing signal right now is not Bitcoin by itself. It is all performance on a relative basis, which is still holding up well.

“There is ... definitive inflows into Bitcoin from gold,” Lim said. Surprisingly, amidst all the turmoil, inflows into digital investment products have been positive for three weeks in a row as well.

Where exactly those flows are coming from is harder to pin down. Lim said the answer likely spans multiple corners of the market at once, from macro hedge funds adjusting their positioning to crypto-native traders rotating back into risk to the ongoing impact of institutional-style Bitcoin accumulation vehicles. But the takeaway is the same: after months in which gold looked like the cleaner macro winner, Bitcoin may finally be clawing some of that demand back.

“These are people who I think are long-term believers in crypto as an asset class, maybe have been sidelined, maybe had taken off risk in the $110, $120K-range last year," he said. "But just given how far and how quickly prices have fallen on crypto, it does make sense here for a lot of those market participants to start rotating back.”

That last point may matter more than it first sounds. Crypto markets do not just move on fresh narratives. They also move on who has been forced out, who is under-positioned, and who finally feels comfortable putting risk back on.