Bitcoin Surges 150% Amid Spot-ETF Approval, Faces New Challenges

Bitcoin's price has surged from $40,000 to over $100,000, driven by factors such as spot-ETF approval and a pro-crypto administration. However, Bitwise CEO Hunter Horsley has identified two potential structural obstacles that could hinder Bitcoin's next upward movement.

Horsley points to the increasing competition from high-return alternatives and the diminishing "digital gold" narrative among institutions. In the second quarter, Bitcoin-linked exchange-traded funds saw a significant shift from $3.3 billion in outflows to nearly $10 billion in inflows. In contrast, gold ETFs experienced a 40% drop in demand, falling from $30 billion to roughly $15 billion over the same period. This divergence has contributed to Bitcoin's 34% outperformance against gold since April, although gold has since regained a 10% edge over BTC.

Horsley's first concern is that investors seeking 10x returns may overlook Bitcoin in favor of other opportunities. The growing universe of decentralized finance projects, layer-2 tokens, and new blockchains promising exponential gains could dilute capital into smaller, higher-volatility tokens. DeFi lending tokens, NFT platform tokens, and Ethereum layer-2 coins have delivered returns exceeding 200% in recent quarters, far surpassing Bitcoin's 58% year-on-year gain.

Horsley's second concern is the potential erosion of Bitcoin's "apolitical store-of-value" narrative. Early supporters viewed BTC as digital gold, an inflation hedge independent of any government. However, Horsley argues that this narrative is losing traction among major asset allocators. He predicts that Bitcoin's true rivals will be government bonds and T-bills, which offer safe, yield-bearing alternatives that institutional treasury desks understand. Higher nominal yields on bonds could draw funds away from a zero-yield asset like Bitcoin.

Despite these challenges, Bitcoin has outperformed both gold and U.S. equities over the past year. On a 12-month basis, BTC gained about 58%, compared to gold’s 46% and the S&P 500’s 11%. The BTC/gold ratio would need to reach 40 to restore BTC’s lead over gold, a point some chartists view as a key upside target. This week, the BTC/gold ratio rose just 1.5%, demonstrating stable relative performance even amid geopolitical tensions. Bitcoin’s holding power contrasts with gold’s more volatile moves during regional risks.

Horsley believes these two trends—alternative high-return tokens and bond competition—aren’t urgent threats today but could surface as headwinds in coming quarters. Investors and traders should watch shifts in ETF flow patterns and yield curves. For now, Bitcoin’s spot-ETF era looks firmly established. However, if DeFi tokens continue to skyrocket or Treasury yields remain elevated, the price of Bitcoin may face stiffer competition for capital.