Bitcoin plunges while gold rises, destroying the crypto ‘safe haven’ narrative

In large part, that reflected a general risk-off attitude across global markets this morning. S&P 500 futures were down 0.19% after the index closed up 1.55% yesterday. Asia was mixed this morning and Europe followed by moving flat-to-down in early trading.

Crypto may be suffering from a significant shift in sentiment: until October 6 this year, Bitcoin and gold had moved up together, though certainly not in tandem. However, both rose on a “safe haven” narrative as stocks soared, despite worries that the tech companies driving them are fuelling an AI bubble.

When the U.S. government shut down, both gold and Bitcoin hit record highs. Deutsche Bank’s analysts even argued that Bitcoin would soon be bought by global central banks as a new reserve asset on their balance sheets (even though crypto is “backed by nothing,” they said).

A month on, the “Bitcoin is digital gold” and thus a “store of value” argument is seemingly in tatters, as Bitcoin and gold have diverged. Gold is moving toward a new record high while “the crypto market’s total capitalization has now fallen by about 24% (over $1 trillion) since its October peak,” according to a note by Deutsche Bank’s Marion Laboure and Camilla Siazon shared yesterday.

Gold, by contrast, looks unstoppable. “Gold has just delivered its most extraordinary year in more than four decades. Prices surged more than 50% in 2025 so far, making it the metal’s best performance since 1979,” according to ActivTrades analyst Carolane de Palmas.

Two major factors are uncoupling the fortunes of gold and Bitcoin

First is that the Bitcoin ETF trade has seen a sharp unwinding over the last 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 create a crypto wallet) decided to enter the market. But with the price of Bitcoin plunging over the last 30 days, hundreds of millions of dollars have poured out of those ETFs, as this chart from Deutsche shows:

“Every $1 billion that leaves a Bitcoin ETF pulls down the price of Bitcoin by 3.4%,” according to Alex Saunders at Citi Research.

The second major factor pushing up gold is, ironically, crypto. Tether, the issuer of the USDT stablecoin, has become a buyer of gold on a scale comparable to central banks. Tether maintains USDT on a 1:1 peg with the U.S. dollar by backing each coin with the dollar equivalent in cash, bonds or—more recently—gold bullion. This year alone, Tether’s gold buying is the equivalent of 12% of all central bank gold buying, according to Jefferies.

For crypto investors, stablecoins (as the name suggests) offer respite from the fluctuations of Bitcoin. So the more Bitcoin declines, the more crypto investors move into stablecoins like USDT while they await a turnaround, and the more gold gets bought to back those stablecoins—pushing up the price of the yellow metal. Thus begins a spiral that widens the divergence between gold and Bitcoin over time.

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

S&P 500 futures were down 0.19% this morning. The last session closed up 1.55%.
STOXX Europe 600 was down 0.15% in early trading.
The U.K.’s FTSE 100 was flat in early trading.
Japan’s Nikkei 225 was flat.
China’s CSI 300 was up 0.95%.
The South Korea KOSPI was up 0.3%.
India’s NIFTY 50 is down 0.29%.
Bitcoin was at $87K.