For years, Bitcoin has been touted as “digital gold,” a hedge against inflation and policy excesses.
But as geopolitical tensions rise and trade disputes return to the headlines, gold, an inherent store of value, is in the spotlight.
Gold soared to an all-time high of $4,376 per ounce on Oct. 17, pushing its market capitalization to more than $30 trillion, according to TradingView data.
This would make the yellow metal about 14 times Bitcoin’s current valuation of $2.1 trillion, making it more valuable than all seven of the world’s largest tech companies, including Apple, Microsoft and Nvidia.
Year-to-date, gold is up a whopping 60%, easily outpacing the S&P 500’s 14% rise and Bitcoin’s 17% rise.
Why is gold rising?
The surge comes as trade tensions flare up after US President Donald Trump announced plans for tariffs on China.
The move shocked global markets and revived demand for traditional hedging. Gold, already buoyed by months of central bank accumulation, has become the go-to asset for investors looking to escape currency and policy risks.
Julian Timmer, Director of Global Macro at Fidelity, said:
“Demand for gold is increasing as countries seek to diversify away from US reserve currency hegemony. We see the proportion of reserve assets held in gold steadily increasing and is now on par with reserve assets held in the euro. Hard money is taking share from fiat currencies, and the dollar is losing market share to gold.”
In fact, the available data supports that view. Tokenized gold products on Ethereum have increased more than 100% since the beginning of the year to more than $2.4 billion, according to data from Token Terminal.
This growth can be seen in Tether Gold (XAUT)‘s market capitalization has more than doubled this year, increasing from $650 million to $1.6 billion.
At the same time, analytics platform CryptoRank estimates that gold inflows have exceeded Bitcoin inflows by more than $15 trillion since January 2024, reflecting the strength of the institutional shift to precious metals.
Why Bitcoin is falling
The same forces pushing up gold appear to be weighing on Bitcoin, the largest crypto asset by market capitalization.
According to crypto slate According to the data, BTC price has fallen more than 4% in the past 24 hours, briefly falling to $103,300, the lowest since June, but has recovered to $106,051 at the time of writing.
Still, this price performance is down 16% from the bellwether digital asset’s all-time high of $126,173.
James Elkaleh, Bitget Wallet CMO. crypto slate They say the market decline reflects short-term panic rather than structural weakness. He described the decline as an “initial panic-induced sell-off” caused by tariff-related shocks.
As a result, Coinperps data shows that market sentiment has sharply returned to “fear.” Notably, this is in line with levels last seen in April, when Bitcoin traded below $80,000.
Meanwhile, El Cale argued that Bitcoin emerges as a winner in politically charged market environments due to its core value proposition as a non-sovereign hedge against policy risks and currency depreciation.
According to him:
“Bitcoin remains a hybrid asset. In the early stages of a macro shock, it trades like a risk-on tech stock and is sold off along with other high-beta assets.”
However, as liquidity conditions improve and confidence in traditional markets weakens, they often move into a safe haven role, benefiting from fixed supply, global accessibility, and separation from state-issued currencies. ”