Bitcoin price plunges while gold rises, destroying crypto ‘safe haven’ narrative
After a brief five-day rally, Bitcoin once again continued its decline, losing another 1% between 7pm ET last night and 6am this morning. Its price was $87,000 at the time of writing. This largely reflects a general risk-off attitude in global markets this morning. Standard & Poor’s 500 futures fell 0.19% after the index closed 1.55% higher yesterday. Asia was mixed this morning, with Europe following suit, moving from flat to bearish in early trading.
Cryptocurrencies may be experiencing a major shift in sentiment: until October 6th of this year, Bitcoin and gold were rising together, although certainly not in sync. However, both rose on a “safe haven” narrative as stocks rose, despite concerns that the technology companies driving them are fueling an AI bubble.
When the US government shut down, both gold and Bitcoin reached record levels. Deutsche Bank analysts even claimed that global central banks will soon buy Bitcoin as a new reserve asset on their balance sheets (even though cryptocurrencies are “not backed by anything,” they said).
A month later, the “Bitcoin is digital gold” argument appears to be in tatters, with Bitcoin and gold diverging. Gold is heading towards a new record high while “the total value of the cryptocurrency market is now down about 24% (more than $1 trillion) since its peak in October,” according to a note written by Deutsche Bank’s Marion Laborie and Camila Ciazon yesterday.
In contrast, gold seems unstoppable. “Gold just had its most exceptional year in more than four decades. Prices are up more than 50% in 2025 so far, making it the metal’s best performance since 1979,” according to ActivTrades analyst Carolann de Palmas.
There are two main factors that separate the fortunes of gold and Bitcoin
The first is that Bitcoin ETF trading has seen a sharp decline over the past few days. When traditional finance platforms launched Bitcoin ETFs, there was a huge influx of interest, as retail investors (who previously may not have felt confident enough to set up a cryptocurrency portfolio) decided to enter the market. But as Bitcoin’s price has fallen over the past 30 days, hundreds of millions of dollars have flowed out of these ETFs, as this chart from Deutsche Bank shows:
“Every $1 billion that exits a Bitcoin ETF reduces the price of Bitcoin by 3.4%,” says Alex Saunders of Citi Research.
Ironically, the second major factor driving gold higher is cryptocurrencies. Tether, the issuer of the USDT stablecoin, has become a buyer of gold on a scale similar to central banks. Tether maintains a 1:1 peg between the USDT and the USD by backing each currency with its dollar equivalent in cash, bonds, or – more recently – gold bullion. This year alone, Tether’s gold purchases are equivalent to 12% of the central bank’s total gold purchases, according to Jefferies.
For cryptocurrency investors, stablecoins (as the name suggests) provide a respite from the volatility of Bitcoin. Therefore, the lower the price of Bitcoin, the more cryptocurrency investors move to stablecoins like USDT while they wait for the conversion, and the more gold is bought to back those stablecoins, causing the price of the yellow metal to rise. Thus begins a spiral of expanding divergence between gold and Bitcoin over time.
Here’s a quick snapshot of the markets before the opening bell in New York this morning:
- Standard & Poor’s 500 futures It is down 0.19% this morning. The last session closed at an increase of 1.55%.
- the Stokes Europe 600 It fell by 0.15% in early trading.
- UK FTSE 100 index It was flat in early trading.
- Japan Nikki 225 It was flat.
- China CSI 300 It rose by 0.95%.
- South Korea Cosby It rose by 0.3%.
- India Stylish 50’s Decreased by 0.29%
- Bitcoin It was at $87,000.
2025-11-25 12:18:00
