For the first time, some crypto hedge funds report zero exposure to both Bitcoin while holding gold | Credit: Hameem Sarwar
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Key Takeaways
Aggregate Bitcoin ETF allocations among the largest hedge fund holders fell 28% in Q4 2025.
Gold ETFs now hold $407 billion in assets, more than double Bitcoin ETFs’ $166 billion.
Investment advisers increased aggregate Bitcoin ETF positions every quarter over the past year.
While Bitcoin’s price crashed below $65,000, gold’s market value has risen above $5,000 again.
Market sentiment and geopolitical tensions will determine whether gold or BTC wins in 2026.
Hedge funds have voted with their wallets, and may continue to choose gold over Bitcoin (BTC) this year.
Aggregate Bitcoin exchange-traded funds (ETFs) allocations among the largest hedge fund holders fell 28% from Q3 to Q4 2025, according to CF Benchmarks.
Meanwhile, gold surged 55% for the year, crushing Bitcoin’s 30% decline from its October peak of $126,000.
The divergence is brutal. Gold ETFs now hold $407 billion in assets, more than double Bitcoin ETFs’ $166 billion.
Central banks bought record amounts of gold while Bitcoin struggled to maintain its “digital gold” narrative.
For the first time since the ETFs launched, some crypto hedge funds report zero exposure to both Bitcoin and Ethereum (ETH).
But here’s the twist: while hedge funds fled, investment advisers quietly accumulated everything they were selling.
Why Hedge Funds Chose Gold Over Bitcoin
The shift to gold wasn’t random. It was driven by Bitcoin’s failure as a safe-haven asset during 2025’s market stress.
Gold-focused ETFs recorded strong inflows, while Bitcoin investment products saw capital exit.
The correlation that once linked gold and Bitcoin from 2022 to 2024 broke down completely in early 2025.
Duke University’s Campbell Harvey published research confirming what markets had already shown: gold continues to play a more stable role in times of crisis, while Bitcoin faces unique systemic and technical risks that gold does not.
“Gold continues to outperform Bitcoin in periods of geopolitical or market stress,” Harvey wrote, reaffirming its reputation as a risk-off asset.
For Pavel Efremog, Director at FinchTrade, the decline in holdings shouldn’t scare anyone.
Speaking to CCN in an exclusive interview, he noted that the lack of arbitrage drove hedge funds away, and that this is not necessarily bad for BTC despite the price decline.
“It was an arbitrage strategy that required no view on Bitcoin whatsoever. Funds bought spot ETFs, shorted futures, and pocketed the difference. When that difference disappeared, so did they,” Efremog emphasized.
The data backs this up. In 2025, gold delivered a 55%+ return while Bitcoin fell 6% for the year and 30% from its peak.
During October 2025’s tariff panic, Bitcoin’s price dropped to $104,000 before rebounding, a volatility pattern that contrasted with gold’s resilience.
Bloomberg called it Bitcoin’s “$1 trillion identity crisis,” noting that despite unprecedented institutional adoption and Washington’s accommodating stance, the asset can’t decide what it’s for.
“If it isn’t the best hedge, the best payment rail, or the best speculation — what, exactly, is it for?” Bloomberg asked.
Who’s Buying What Hedge Funds Are Selling
While hedge funds exited, registered investment advisers increased their aggregate Bitcoin ETF positions every single quarter over the past year — a 145% year-over-year rise, according to CF Benchmarks.
The contrast is striking. Hedge funds, which are speculative, short-term, momentum-driven, fled as soon as returns weakened.
Investment advisers, long-term, client-facing, allocation-focused, kept accumulating through the volatility.
Investment advisers “don’t typically trade around short-term volatility,” CF Benchmarks notes.
These firms are building Bitcoin exposure into client portfolios as a long-term allocation, not a tactical trade.
Furthermore, some sovereign wealth funds bucked the trend entirely. The Emirate of Abu Dhabi increased its Bitcoin ETF position by 46% in Q4 2025.
JPMorgan Chase, Mubadala, and BlackRock were among the 17 out of 25 top institutional holders that increased exposure during the quarter.
Despite the decline in hedge fund holdings, Daniel H., CEO and co-founder of on-chain execution layer Banana Gun, explained that the development could be great for Bitcoin and crypto in the long term.
“When conviction drops, and price action tightens, traders move away from passive exposure and focus on short-term opportunities. What we’re seeing is less a retreat from the market and more a transition from long-term positioning to active risk management.” Daniel told CCN.
Gold Price Analysis
Following the move, gold’s price has reclaimed $5,200. BTC, on the other hand, trades below $65,000, down nearly 50% from its all-time high.
From a technical perspective, the 4-hour chart shows that gold is pushing higher.
After a sharp 18.93% correction in late January, XAU/USD has recovered. Notably, it just broke above key resistance at the 0.618 Fibonacci level ($5,160).
As such, the gold price currently trades at $5,168.
Furthermore, a rising trendline has supported the price since the February low near $4,398, forming a series of higher lows.
Each dip has attracted buyers. The breakout above the horizontal resistance zone (annotated on the chart) confirms bulls are back in control.
The Awesome Oscillator (AO) tells the same story. It reads 174.47 and is climbing sharply, its strongest print since the January peak, indicating that momentum is accelerating, not fading.
The Money Flow Index (MFI) sits at 78.49 — in overbought territory. That signals strong buying pressure but also flags the risk of a short-term pullback before the next leg higher.
As it stands, the next Fibonacci target for gold is $5,342 (0.786). Beyond that, the all-time high zone near $5,599 comes into play.
Bulls hold the upper hand as long as the price stays above the $5,160 breakout level. On the contrary, a decline in buying volume might invalidate this prediction.
In that scenario, gold’s price might slide to $4,998. In a highly bearish case, it could fall to $4,681.
The case for their return: cash-and-carry arbitrage returns collapsed to 4% by February 2026.
But at the same time, they could widen again if volatility picks up. If Bitcoin breaks back above $80,000 with momentum, fast money will chase the trade.
The case against gold’s structural advantages—central bank demand, proven crisis performance, regulatory clarity—isn’t going away.
Also, the sentiment that the U.S. could strike Iran makes the case for gold’s price even stronger. Historically, when geopolitical tensions arise, gold prices spike.
Should that be the case, then demand for gold could outpace Bitcoin again.
In addition, still needs to prove it can function as something other than a high-beta Nasdaq proxy.
For now, the smart money is split. Hedge funds chose gold. Investment advisers chose Bitcoin, and the rest of 2026 will decide who was right.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Victor Olanrewaju is a crypto analyst and reporter at CCN with deep roots in on-chain research and technical analysis. His crypto journey began in 2017, but it was the 2020 Uniswap airdrop that sparked a full-time pivot into the space.
With a foundation in copywriting, Victor honed his craft creating high-converting content for leading crypto brokers — most notably an XRP price prediction that ranked #1 on Google during the 2021 bull run.
He later joined AMBCrypto in 2022, where he combined storytelling with technical and on-chain analysis to cover key market narratives.
In 2024, he expanded his expertise at BeInCrypto, collaborating with analysts and using tools like Glassnode, Santiment, and IntoTheBlock to break down Bitcoin and altcoin trends.
At CCN, Victor covers the top cryptocurrencies, memecoins, macro shifts, blending real-time insights with deep-dive metrics.
He holds a Bachelor’s degree in Physics from the University of Ibadan, equipping him to simplify complex data for a wide audience. Follow his work or connect on LinkedIn or X.
