Gold’s $2.5 Trillion Decline Surpasses Bitcoin’s Total Market Value

Gold, one of the oldest and most reliable stores of value, experienced a severe sell-off within 24 hours, erasing trillions of dollars in market value—more than the entire value of Bitcoin.

The gold market extended Tuesday’s significant correction, with $2.5 trillion being removed from its market cap on Wednesday, according to the financial analysis publication, The Kobeissi Letter.

On track for its largest two-day decline since 2013, the 8% drop has triggered panic among investors who had turned to the metal as a hedge against inflation and market volatility following its 60% surge earlier in 2022.

Although Bitcoin (BTC)—often referred to as “digital gold” due to its capped supply—tends to experience sharper daily corrections with double-digit percentage declines, gold’s recent collapse highlights that even “safe-haven” assets can face significant sell-offs.

Gold’s 7% drop is rare: Here’s why it crashed

The magnitude of the correction is exceptionally unusual and, in theory, would only occur “once every 240,000 trading days,” noted Alexander Stahel, a resources investor in Switzerland, in a post on X on Tuesday.

“Gold is teaching us a lesson in statistics,” he remarked, adding that the asset has faced even larger drawdowns since 1971, with such corrections happening 21 times.

Regarding the reasons behind the dip, Stahel pointed to the increasing fear of missing out (FOMO), as a “gold frenzy” momentum grew among investors seeking exposure to gold equity, physical gold bars, and tokenized gold.

“FOMO triggered the latest surge. Now, profit-taking and weaker investors have been shaken out,” Stahel added, mentioning that statistically, “calm days may be ahead.”

Crypto Fear & Greed Index at lowest levels since 2022

As gold’s $2.5 trillion drop exceeds Bitcoin’s entire market cap of $2.2 trillion, some analysts emphasized the scale of the correction compared to the crypto market.

“In terms of market cap, this gold decline today is equivalent to 55% of the total value of all cryptocurrencies,” veteran trader Peter Brandt stated in an X post on Tuesday.

Bitcoin, often criticized for its volatility as a key argument against it being a legitimate store of value, has also dropped 5.2% from its intraday high of $114,000, though daily losses were about 0.8% at the time of writing, according to Coinbase data.

While Bitcoin spot exchange-traded funds (ETFs) also experienced $142 million inflows yesterday, the broader crypto market momentum fell into “Extreme Fear,” with the Crypto Fear & Greed Index dropping to levels not seen since December 2022.

Related: Bitcoin-gold correlation increases as BTC follows gold’s path to store of value

Gold’s ongoing volatility follows observations from Deutsche Bank’s macro strategist Marion Laboure, noting parallels between gold and Bitcoin, which may render the crypto asset an attractive store of value.

Deutsche Bank’s analysts also highlighted that despite soaring to new highs in dollar values, gold only surpassed its real-adjusted all-time highs in early October.