Author: Aditya Pareek | EQMint | Fintech News
A sharp plunge in Bitcoin prices has reignited the long-standing debate over whether crypto volatility inevitably boosts demand for gold. Both assets have been positioned for years as competing “stores of value,” and historically, risk-off sentiment in financial markets has often benefited bullion. But 2025’s price action is challenging that assumption.
As Bitcoin erased nearly 25% of its value this month, dropping to around $80,500 last Friday, the crypto market lost roughly half a trillion dollars in market capitalization. The digital token has since rebounded to $86,000, but the sell-off has shaken investor sentiment across the broader crypto universe.
Despite the severity of the correction, gold has not rallied in tandem with Bitcoin’s decline, breaking the pattern that many investors expected. So, does crypto’s crash open the door for a renewed breakout in gold? Analysts are divided.
What Triggered the Bitcoin Selloff?
Unlike previous downturns linked to regulatory actions or leverage liquidations, this slump has been fueled mainly by spot selling, according to Bloomberg.
The selloff was primarily driven by:
- Redemptions from large Bitcoin ETFs
- Long-dormant wallets releasing supply into the market
- Reduced appetite from momentum traders
- Deteriorating global liquidity conditions
Kunal Shah, Head of Commodity Research at Nirmal Bang, said Bitcoin’s price action mirrors global liquidity trends. The crypto crash coincided with 20-year highs in Japanese 10-year and 30-year bond yields, signaling turbulence across fixed-income markets.
“When the fixed-income market faces turbulence, there is a flight of capital from risk to safety,” Shah said. “That is the main reason Bitcoin has collapsed the way it has.”
Crypto Down, but Bullion Not Rallying — Why?
At the same time Bitcoin entered a downward spiral, gold — the traditional safe-haven asset — has shown resilience but not a breakout rally.
Gold’s sharp run-up earlier in the year was largely driven by:
- Expectations of rate cuts
- A weaker dollar
- Strong ETF inflows
- Aggressive central-bank purchasing
With much of this optimism already factored into prices, analysts say a Bitcoin crash is not enough to fuel a fresh surge in bullion.
Despite its safe-haven reputation, gold appears to have priced in the supportive macro forces already.
Shah warned:
“Gold has run up way ahead of its fundamentals. The upside is going to be restricted in the near term.”
Monday’s early morning session reflected this sentiment, with MCX gold futures dropping nearly 1% amid profit-booking and lack of new triggers.
Has Gold Become Overbought?
Analysts believe gold’s current price levels already reflect most bullish drivers.
Why gold may pause before another rally:
| Bullish Factors Already Priced In | Counterforces Emerging |
|---|---|
| Rate-cut optimism | Dimming Fed rate-cut expectations |
| Weak dollar | Dollar regaining strength |
| Central-bank accumulation | Slower ETF inflows |
| Geopolitical risk | Reduced war premium |
One analyst estimated that if gold reflected pure fundamentals, it should have traded closer to $4,000, not significantly above.
As a result, a consolidation period — rather than another sharp rally — appears more likely in the near term.
What Could Reignite Gold’s Bull Run?
Ross Maxwell, Global Strategy Lead at VT Markets, said gold’s medium-term outlook remains cautiously positive, but the next move depends on new catalysts.
Possible triggers for another bullish leg:
- Deeper monetary easing
- A renewed geopolitical shock
- Sharp drop in real yields
- A fresh surge in central-bank buying
Conversely, Maxwell warned that downside risks remain:
- Strong US dollar
- Higher real yields
- A slowdown in central-bank purchases
Given this mixed setup, Maxwell advises that gold should be treated as a diversification asset, not a quick profit trade.
What Levels Should Investors Watch?
Prathamesh Mallya, DVP Research – Non-Agri Commodities & Currencies at Angel One, outlined key projections.
📌 Upside potential (12-month horizon):
- $4,500 internationally
- ₹1,36,000 per 10g in domestic markets
📌 Downside risk:
- $3,500 internationally
- ₹1,11,000 per 10g domestically
Mallya noted:
“Even if Fed rate-cut hopes dim, safe-haven flows and central-bank accumulation may keep gold structurally bullish.”
Bitcoin vs Gold — Which One Wins the ‘Store of Value’ Debate Now?
2025 is presenting a more nuanced picture:
| Asset | Recent Trend | Long-Term Narrative |
|---|---|---|
| Bitcoin | -25% this month | Speculative store of value tied to liquidity cycles |
| Gold | Flat to slightly weak | Defensive store of value tied to real yields & central banks |
While Bitcoin volatility has increased, it may not automatically redirect capital into bullion this time because:
- Gold’s earlier rally already priced in safe-haven demand
- Macroeconomic triggers have shifted
- Gold markets appear temporarily saturated
This means the crypto market crash does not guarantee a gold breakout — at least not without additional macro catalysts.
Conclusion
The latest Bitcoin crash has unquestionably reshaped the risk landscape across global markets, but it has not yet revived a one-way flight to gold. While both assets continue to occupy the “store of value” space, their 2025 trajectories show independent rather than inverse behaviour.
Bitcoin remains deeply tied to global liquidity and risk sentiment, while gold is increasingly influenced by real yields, central-bank purchases and monetary policy expectations.
Analysts believe bullion still has room to rise over the next year — but only if new triggers emerge, such as deeper rate cuts, renewed geopolitical instability or weakening real yields. Until then, the relationship between Bitcoin and gold may remain less reactive and more coexistive, reminding investors that safe-haven flows are no longer predetermined — they are conditional.
For more such insights visit EQMint
Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.
