BofA Flags Bubble Risk in Gold and Materials as Bitcoin News Awaits Potential Rotation Trigger

Key Insights:

• In the latest Bitcoin news, Bank of America flagged gold, silver, US materials stocks, and South Korea’s Kospi as showing “bubble-like” price action in its February 1 weekly research note.
• The bank’s Bubble Risk Indicator (BRI) for gold rose to nearly 1, indicating extreme instability across the commodities complex.
• Bitcoin price remains in a capital-starved regime, with exchange data showing subdued leverage and positioning that could amplify any cross-asset rotation if metals unwind.

Gold and silver are displaying “bubble-like” price action, and Bitcoin can benefit if the bubble pops.

Bank of America Global Research added US materials stocks to its list of assets exhibiting bubble-like behavior, joining gold, silver, South Korea’s Kospi index, and rare-earth stocks.

The bank attributed the frothy price action to a common driver: dollar weakness.

BofA’s Bubble Risk Indicator (BRI) for gold climbed to near 1 during the week ending February 1, a reading the bank described as “an indication of risks in both tails.”

As per the Bitcoin news, the BRI measures price instability using returns, volatility, momentum, and fragility, with fragility defined as local tail events.

A Closer Look at the Bitcoin News

The bank launched weekly BRI updates in response to strong client interest, according to a BofA Global Research LinkedIn post. The updates will highlight pockets of froth and call out increases in bubble-like price action across asset classes.

Gold rallied sharply over the three months preceding BofA’s February 1 note, but the move came with increasing instability. Silver, rare-earth stocks, and the Korean Kospi exhibited similar dynamics, all tied to dollar weakness and volatility.

US equities and megacap tech remained relatively stable by comparison. BofA warned that AI-driven innovation could fuel more unstable, bubble-prone markets going forward.

The bank also noted unusually high return dispersion in European stocks, especially in tech and basic resources, despite muted index-level gains. The divergence suggested selective froth rather than broad-based euphoria.

Bitcoin News: Crypto Markets Sit in Post-Deleveraging Regime

Bitcoin price entered February 2026 in a fragile state.

CryptoQuant’s verified author IT Tech reported that a lack of fresh capital reinforced bear conditions, with weak or negative new inflows failing to offset institutional spot Bitcoin ETF outflows.

The Bitcoin news showed that the exchange data painted a clearer picture of the setup. CoinGlass reported that capital was returning to exchanges, but leverage ratios had not recovered.

Binance showed strong fund inflows and volume, yet average leverage remained suppressed. The firm characterized the environment as “post-deleveraging” and “waiting for a trigger.”

During the February drawdown that pushed Bitcoin to $60,000, BTC’s correlation with gold remained historically low, trading more like a growth asset than a safe haven.

Bitcoin News: Liquidity Exit | Source: CryptoQuant/IT Tech

Could a Metals Unwind Become a Flow Catalyst for Bitcoin?

The rotation thesis rests on a conditional framework. If gold and silver unwind due to profit-taking in crowded defensives while risk appetite stabilizes, Bitcoin could benefit as a higher-beta alternative allocation.

Spot Bitcoin ETF now provide operationally simple rails that resemble the ETF convenience that scaled gold allocations.

The World Gold Council reported global gold-backed ETF AUM around $669 billion as of February 6. If just 0.25% to 1.0% of that pool were reallocated into Bitcoin proxies, the potential incremental demand would range from $1.7 billion to $6.7 billion.

That scale is large relative to recent weekly spot Bitcoin ETF flow headlines and could change the tape if it arrived as spot rather than leverage.

However, the same infrastructure that enables rotation also exposes Bitcoin to fast, pro-cyclical outflows when risk breaks.

As per Bitcoin news discussions, if the metals unwind is driven by a stronger dollar or tighter financial conditions, BTC could weaken alongside broader risk assets.

BofA explicitly tied the froth cluster to dollar weakness. A sustained reversal toward a stronger dollar would be a headwind for both gold and Bitcoin, making the rotation thesis the lower-probability branch in that macro state.

Flow Plumbing Matters More Than the Digital Gold Narrative

The low correlation of Bitcoin with gold means the decisive variable is not the “digital gold” label but the plumbing: where the marginal dollar can move quickly and whether leverage is being rebuilt.

The cleanest test is whether the next marginal inflow shows up in Bitcoin spot and ETF channels without leverage.

If the first sign of rotation is rising open interest and aggressive funding, a gold-led risk event could spill into Bitcoin via liquidation rather than support it.

If the first sign is sustained spot and ETF inflows while leverage stays muted, the rotation thesis becomes more credible.

CoinGlass framed the current regime as exactly that setup: cleaner positioning, subdued leverage, and capital returning in a post-deleveraging environment. The missing piece was a trigger large enough to shift sentiment.

Binance Registers $1 billion in Inflow | Source: CoinGlass

BofA’s Weekly Froth Map Legitimizes Cross-Asset Hedges

BofA’s decision to publish a recurring bubble-risk product matters because it turns a loose trader meme into a bank-distributed monitoring framework.

More clients will ask, “what’s the hedge if this pops,” creating room for cross-asset pitches that include Bitcoin even if the empirical link is weak.

The bank’s emphasis on dollar weakness as a common driver also matters. If dollar weakness persists but gold volatility becomes expensive, marginal alternative allocations may seek a different expression of the same macro view.

Bitcoin enters the conversation only as an investable asset. The flows must prove the relevance of BTC, and not the narrative.

BofA’s weekly updates will highlight pockets of equities exhibiting the most froth and call out increases in bubble-like price action.

That recurring narrative supply increases the likelihood that Bitcoin is pitched as a conditional hedge, even if Bitcoin’s recent behavior resembles growth more than gold’s.

Next Regime Shift Lives or Dies on Measured Inflows

The bull case for a metals-to-Bitcoin rotation is not “gold pops then Bitcoin pumps.” It is “if gold volatility forces position changes, do we see measurable, sustained Bitcoin inflows without leverage.”

That thesis is testable on a week-by-week basis. CryptoQuant’s framing that bear conditions are reinforced by weak inflows implies that a meaningful new source of demand could be regime-changing if sustained.

However, the same week’s mainstream reporting showed institutional ETF outflows and large price declines, suggesting the market remained fragile to risk-off shocks.

The rotation story lives or dies on whether the flow arrives as spot buying with subdued leverage. Leverage-led rallies tend to reverse when volatility spikes.

Spot and ETF inflows, while leverage remains muted, would make the thesis credible.

BofA is telling clients that gold’s price action has become volatile and that hedging has become expensive.

The bullish Bitcoin scenario requires observable, sustained spot and ETF inflows into Bitcoin without leverage rebuilding, in a market multiple sources describe as capital-starved or post-deleveraging.

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