Bitcoin has been referred to as “digital gold” for years, serving as a bulwark against inflation and excessive fiscal policies.
However, with escalating geopolitical tensions and a resurgence of trade conflicts, traditional gold is regaining attention as the principal store of value.
As reported by TradingView data, gold has surged to an unprecedented $4,376 per ounce as of October 17, driving its market cap past $30 trillion.
This places gold at about 14 times the size of Bitcoin’s current valuation of $2.1 trillion, surpassing the combined worth of the top seven tech giants including Apple, Microsoft, and Nvidia.
Gold has seen a remarkable 60% increase so far this year, significantly outperforming both the S&P 500, which gained 14%, and Bitcoin, which rose by 17%.
What’s Driving the Gold Surge?
This upward trend follows the announcement of tariffs on China by US President Donald Trump, reigniting trade tensions.
This announcement shook global markets and fueled interest in traditional safe havens. Gold, already supported by extensive central bank purchases, has become the favored asset for investors looking to hedge against currency and policy instabilities.
According to Jurrien Timmer, director of global macro at Fidelity, “Gold is increasingly sought after as nations aim to reduce their dependency on the US dollar. The proportion of reserve assets allocated to gold has been growing and is now on par with reserves in euros. Hard money is gaining traction over fiat as the dollar loses ground against gold.”
Select data backs this perspective. Token Terminal’s information shows that tokenized gold on Ethereum has more than doubled year-to-date, reaching a market cap of over $2.4 billion.
This expansion is also evident in Tether Gold (XAUT), with its market capitalization surging from $650 million to $1.6 billion this year.
Concurrently, analytics platform CryptoRank estimates that investments in gold have surpassed those in Bitcoin by over $15 trillion since January 2024, indicating a strong institutional pivot toward the precious metal.
Factors Behind Bitcoin’s Decline
The same pressures uplifting gold seem to be negatively impacting Bitcoin, the leading cryptocurrency by market capitalization.
Per CryptoSlate data, BTC has dropped over 4% in the last 24 hours, briefly sinking to its lowest point since June at $103,300 before rebounding to $106,051.
This represents a 16% fall from the digital asset’s highest recorded value of $126,173.
James Elkaleh, CMO of Bitget Wallet, mentioned to CryptoSlate that the recent market downturn reflects short-lived panic rather than any underlying weakness, describing it as “preliminary panic selling” triggered by tariff-induced shocks.
Consequently, Coinperps data shows market sentiment has sharply shifted back into “Fear,” mirroring levels seen in April when Bitcoin was priced below $80,000.
On the other hand, Elkaleh believes Bitcoin will ultimately thrive in this politically charged atmosphere due to its fundamental attributes as a non-sovereign hedge against policy risk and inflation.
He stated:
“Bitcoin is a hybrid asset. At the onset of macroeconomic shocks, it behaves like high-risk tech equities, falling in line with other volatile assets.
However, as liquidity improves and faith in traditional markets wanes, it often transitions into a safe-haven asset—benefitting from its limited supply, global reach, and disconnect from government-issued currencies.”
