Gold, Bitcoin ETFs draw record $7B inflows on Treasury buyback

Gold and Bitcoin ETFs drew a record $7 billion in combined inflows over five trading days as Treasury's expanded bond buyback plan revived the debasement trade.

"The real thing to watch isn't just the size of the inflows, but the momentum behind them — demand is not just positive, it's accelerating," Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, said.

SPDR Gold ETF (GLD) attracted about $3.4 billion, ranking among the week's top US ETF inflows, while iShares Bitcoin Trust (IBIT) took in $1.5 billion. Gold has climbed roughly 13 percent this month to above $4,600 an ounce, and Bitcoin reclaimed the $80,000 level after rising 24 percent from $64,269 before the Treasury announcement.

Treasury Secretary Scott Bessent said Aug. 19 the department would at least double its liquidity-support purchases of longer-dated Treasury securities to $4 billion per operation, and officials are considering tapping the roughly $950 billion Treasury General Account to fund them. The 10-year yield fell to about 4.70 percent while the 30-year slipped toward 5.24 percent — lower yields reduce the opportunity cost of holding non-yielding assets like gold and Bitcoin.

Treasury Policy Reshapes the Scarcity Calculus

The buyback expansion marks a shift in how the Treasury manages the long end of the curve. Historically, buybacks could be offset by issuing more short-term bills, limiting their broader liquidity impact. Drawing down the TGA is different — it puts cash back into the financial system while the Treasury purchases longer-dated securities.

Bernstein senior digital assets analyst Gautam Chhugani wrote that the 40-year declining rate cycle appears to be over, and with sovereign debt at record highs, governments face mounting debt-service pressure. "Investors holding scarce assets like Bitcoin could benefit — these are assets that cannot be easily issued or diluted," he said.

The market's reaction suggests investors increasingly expect policymakers to intervene when higher yields threaten financial conditions. That expectation, paradoxically, strengthens the case for owning assets outside the dollar-and-Treasury system.

Bitcoin's Supply Squeeze Meets Institutional Demand

Spot Bitcoin ETFs recorded their strongest weekly inflow in 10 months last week at $1.92 billion, with a further $337 million on Monday, according to Bloomberg data. That demand has collided with tight available supply — roughly 60 percent of Bitcoin in circulation hasn't moved for more than a year, according to Cici Lu McCalman, founder of Venn Link Partners.

The surge caught leveraged bears off guard: about $7.2 billion in short positions across all cryptoassets were liquidated last week, per Coinglass data. Bitcoin now trades near its 50-week moving average of roughly $81,000, a level technical traders see as confirming the rally's durability. The token remains well below its October peak of about $126,000.

Not all analysts are convinced. Fundstrat economic strategist Hardika Singh said the debasement trade's momentum is fading and stocks may be a more reliable hedge than gold or Bitcoin. "The deficit is a problem, but the fact that it's unsolvable is ironically part of the solution — investors will eventually have to accept that reality," she wrote.

Ray Dalio has recommended investors hold up to 15 percent of assets in gold and a small allocation to Bitcoin to hedge against US debt risks. For investors, the record ETF flows suggest the market is already positioning for that scenario.

This article is for informational purposes only and does not constitute investment advice.