Spot gold prices fell more than 5.3% Tuesday to $4,125, putting it on track for its largest single-day decline in more than five years as traders took profits from the metal’s record run to an all-time high of $4,260 on Monday. The retreat follows months of parabolic gains driven by rate-cut expectations and geopolitical hedging, leaving gold’s rally looking stretched and sparking renewed interest in bitcoin and other risk assets.
For much of the past two months, gold has outperformed its digital counterpart by a wide margin, according to The Block’s weekly data newsletter from Oct. 20. The BTC/gold ratio fell roughly 30% since mid-August, from around 37 to about 25, marking its lowest level since President Donald Trump’s “Liberation Day” tariff shock in April. Over that period, bitcoin declined about 12% while gold surged nearly 30%, cementing the physical metal as one of 2025’s top-performing investable assets.
Analysts attributed the surge to a “risk-off” rotation tied to global trade frictions and a revival of the so-called debasement trade — the belief that persistent fiscal deficits, rising debt, and falling real rates will erode fiat value. With the Federal Reserve widely expected to cut rates again later this month — a move priced in at just under 99% probability, according to CME’s FedWatch tool — gold has drawn consistent structural demand from individuals, central banks, and sovereign funds.
However, that tide may now be turning.
Bitcoin climbed back to the $113,800 level today after hitting an early-morning low beneath $108,000, with Horizon’s Head of Growth Joe Consorti calling it the “early stages of an aggressive catch-up trade.” He said fund managers are shifting back into risk through year-end amid a dovish Fed and calming geopolitical tensions.
Bitwise researchers reached a similar conclusion, arguing that even a modest reallocation of gold’s $17 trillion market could have an outsized impact on bitcoin’s price. “Only a 3% to 4% rotation would be enough to double BTC,” the firm said in a Monday report, adding that a 2% shift alone could lift bitcoin above $161,000.
© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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