This article examines the increasing divergence between gold and bitcoin, explored through central bank behaviours and market dynamics. While gold is being stockpiled by central banks in response to economic uncertainty, bitcoin’s recent decline can be attributed to overvaluation and its correlation with volatile markets like the Nasdaq. The historical context of both assets further illuminates their differing influences and maturity in the financial landscape.
Global central banks, notably in China, India, and Russia, are stockpiling gold at unprecedented rates. Amidst bitcoin’s recent weakness, investors are increasingly turning towards gold for safety and stability. Between November 2022 and November 2024, both gold and bitcoin exhibited a strong correlation, with corresponding gains of 67% and nearly 400%. However, this correlation began to weaken in 2025, as gold saw a 16% increase while bitcoin fell over 6%. Examining the factors influencing each asset is crucial to understanding this divergence.
Bitcoin’s significant rise in recent years is largely due to its institutional adoption. Major companies like BlackRock and Fidelity have expanded their exposure to Bitcoin, while nations like El Salvador have incorporated it as a financial instrument. Additionally, the U.S. government’s plans for a crypto reserve and financial products such as Bitcoin futures by CME Group have encouraged retail investor participation. These developments have heightened demand while reinforcing bitcoin’s resilience.
Conversely, bitcoin’s recent downturn can be attributed to two main reasons. First, much of the bullish sentiment had been factored into its peak price of $109,000 in January. The phenomenon of “buying the rumour, selling the fact” plays a significant role here. Second, bitcoin’s strong correlation with the Nasdaq influences its trading dynamics, as declines in the Nasdaq often compel traders to liquidate bitcoin holdings to manage margin calls.
Gold’s resurgence stems from economic uncertainty, inflation concerns, and shifts in central bank strategies. Traditionally, investors turn to gold during times of economic volatility, a tendency that is currently evident. The Federal Reserve’s potential easing of monetary policy has enhanced gold’s attractiveness. Most notably, central banks have been buying over 1,000 metric tons of gold annually as they restructure their reserves away from the U.S. dollar, prompted by geopolitical tensions.
This shift is significant, with the dollar’s share in central bank reserves decreasing from over 60% in 2022 to 57% currently. Additionally, bitcoin’s decline appears to have redirected funds towards gold, which has millennia of history as a safe store of value amidst an estimated $2.8 trillion cryptocurrency market.
Lastly, while gold’s status as a historic store of value since ancient times supports its ongoing appeal, bitcoin’s evolution since 2011 argues for its rapid maturation. The current divergence between the two assets underscores the intricate economic, political, and market currents that influence their performance. Both assets remain viable hedges against uncertainty, but their distinct characteristics have led to a breakdown in their earlier close correlation.
