Are Gold and Bitcoin Facing Similar Investor Withdrawals and What Would a Short Squeeze Mean for Their Recovery?
Gold and Bitcoin continue to experience significant investor withdrawals, as the 'debasement trade' unwinds amidst slow developments in U.S.-Iran discussions. According to Eric Balchunas, a Bloomberg ETF analyst, capital outflows from these two assets are leading them to a state of increasingly shared investor sentiment.
With the aftermath of the gold rush still evident, both GLD and GDX are facing worsening conditions, marked by a rough year that has seen short interest rising by 80% and 50%, respectively, based on S3 data. This trend places gold on a trajectory to join Bitcoin in what can be described as a proverbial doghouse.
Gold and Bitcoin's Decline
GLD is designed to track long-term investments in gold, while GDX focuses on equity positions related to mining. The rise in short interest for gold mirrors the weakness seen in Bitcoin (BTC), underscoring this correlation.
Bitcoin has extended its downward trend, reaching a new annual low of $57.7K this week after struggling to break past $83K during the mid-Q2 relief rally. A brief recovery to $62K was noted following a disappointing U.S. jobs report.
Notably, for the first time since their inception in 2024, U.S. Spot ETFs registered a net outflow of $5.4 billion in the first half of 2026, according to data from DWF Labs.
Institutional Sentiment and Market Dynamics
The sentiment among institutional investors also reflects these trends, as indicated by the weekly Commitments of Traders (COT) data from the CME. The COT metric has been predominantly negative throughout 2026, with only short-lived positive figures appearing in late March and April.
This suggests that institutional players were primarily shorting Bitcoin in the first half of 2026, coinciding with negative ETF flows. Although cryptocurrency 'whales' have increased their accumulation of Bitcoin as institutional interest waned, the volume of these purchases remained insufficient to counteract the persistent selling pressure.
As we look to the future, it is expected that market weakness may carry on into the third quarter, with the potential for Bitcoin to explore a market cycle bottom by the fourth quarter of 2026.
Macro Risks and Short-Term Indicators
In the short term, CME's net positioning has momentarily flipped to positive, while U.S. Spot ETFs saw a modest net inflow of $221 million on Thursday, ending a streak of ten consecutive days of outflows. This change is attributed to a weaker U.S. jobs report that alleviated fears of further interest rate hikes by the Federal Reserve.
Analysts from QCP Capital suggest that this shift signals a potential firming of spot demand, though confirmation remains contingent on forthcoming inflation data due mid-July.
While broader confirmation may depend on upcoming CPI and PPI figures scheduled for July 14 and 15, the recent shift in flow patterns implies a budding firmness in spot demand for these assets.
However, resistance levels in the nearer term are charted at $62.3K, the $65K-$67K range, and $75K (200-day SMA), indicating challenges ahead for Bitcoin's recovery.
Conclusion
In summary, both Bitcoin and gold have experienced unprecedented capital outflows and increased short interest during the first half of 2026. Analysts at QCP Capital have noted some signs of consolidation in Spot BTC demand, yet they emphasize the need for further confirmation.
