- Bitcoin has declined 5% since last Thursday, while Gold rose nearly 5% to a record high of $3,791.
- Institutional investors are showing a preference for gold over Bitcoin during ongoing economic uncertainty.
- Sovereign and central bank demand is driving gold’s recent growth, especially from countries like China and Russia.
- Gold has seen higher exchange-traded fund (ETF) inflows than Bitcoin, at $18.5 billion versus nearly $10 billion in recent months.
- Historically, Bitcoin tends to outperform gold when investors become more willing to take risks and after Federal Reserve interest rate cuts.
Bitcoin prices fell by 5% over the last week, while gold surged by nearly the same percentage, hitting an all-time high of $3,791. This recent split in performance comes as institutional investors favor gold amid global economic uncertainty.
According to market data, Bitcoin dropped about 5% since last Thursday. At the same time, gold increased 5% in value, reaching a new record. Inflows into gold ETFs reached $18.5 billion as of September, compared to just under $10 billion for Bitcoin, based on data reported by BOLD Report.
Farzam Ehsani, CEO and co-founder of crypto exchange VALR, said gold’s gains are partly due to strong purchasing by sovereign governments and central banks. “The aggressive accumulation comes from countries like China and Russia using gold as a geopolitical buffer and a hedge against the U.S. dollar dominance,” Ehsani said. He also noted that Bitcoin is still in the early stages of institutional adoption, which leads investors to question its role as “digital gold.”
When examining ETF data, analysts see a clear institutional lean towards gold in the current climate. However, Ryan McMillin, chief investment officer at Merkle Tree Capital, explained that “Gold moves first, Bitcoin follows 1–2 months later.” He highlighted that, as investment risk appetite grows, Bitcoin usually outperforms gold since its market capitalization remains much smaller than gold’s.
Historically, Bitcoin has performed better after the U.S. Federal Reserve reduces interest rates, typically leading to a rotation of capital into risk assets like cryptocurrencies. Private, risk-tolerant investors often shift to Bitcoin as conditions change, resulting in stronger relative gains compared to gold.
The divergence between gold and Bitcoin highlights a broader shift in global investor sentiment, particularly in response to macroeconomic volatility and shifting risk assessments.
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