Why did digital gold Bitcoin lose to real gold?

Over the past 5 years, Bitcoin has outperformed gold by nearly 10 times with an increase of over 1000%, repeatedly topping the list of the strongest assets of the year. However, by 2025, the script has completely reversed: gold has risen over 50% since January, while Bitcoin has only increased by 15%.

The early bird grandma who bought gold is laughing, while the elite traders in the crypto industry remain silent.

Even more bizarre is that gold and Bitcoin seem to have entered parallel worlds: when gold rises, Bitcoin falls; when Bitcoin falls, gold rises.

On October 21, gold suffered a heavy blow, dropping 5% in a single day, while Bitcoin, as if injected with adrenaline, reversed its downward trend and began to rise…

Why is Bitcoin, known as digital gold, decoupled from physical gold?

Buying gold in turbulent times

In 2025, who is the craziest gold buyer? Not retail investors, not institutions, but central banks around the world.

The data doesn’t lie: in 2024, global central banks net purchased 1,045 tons of gold, surpassing a thousand tons for three consecutive years.

According to Q2 2025 data released by the World Gold Council, Poland increased its holdings by 18.66 tons in one go, Kazakhstan followed closely with an increase of 15.65 tons, and China’s central bank steadily added 6.22 tons…

Why are developing countries the ones increasing their gold holdings?

Looking at the proportion of gold reserves in central banks of various countries, developed and developing nations are worlds apart:

The United States holds 77.85% of its assets in gold, totaling 8,133 tons, sharply ahead of Germany in second place with 3,350 tons, followed by Italy and France, holding 2,452 tons and 2,437 tons respectively.

China’s central bank’s gold reserves account for only 6.7% of its total assets, but the absolute amount has reached 2,299 tons and continues to grow.

This contrast is very clear: emerging market countries still have a lot of room to increase their gold holdings. For economies like China, gold reserves account for less than 7%, while most Western developed countries are over 70%. It’s like a “make-up class”: the bigger the gap, the stronger the motivation to catch up.

Exaggerating further, the proportion of central bank gold purchases in total demand skyrocketed from less than 10% in the 2000s to 20%, becoming an important support for gold prices.

Why are central banks suddenly so obsessed with gold? The answer is simple: the world is chaotic, and the US dollar is no longer trustworthy.

The Russia-Ukraine conflict, Middle East tensions, US-China trade frictions… the global village has turned into a Warring States era.

For a long time, the US dollar has been the core foreign exchange reserve for central banks worldwide, also serving as a safe haven. But now, with the US overwhelmed—$36 trillion in debt, accounting for 124% of GDP, with an unpredictable Trump administration, external enemies, and internal divisions…

Especially after the Russia-Ukraine conflict erupted, when the US can freeze foreign exchange reserves at will, countries realized: only the gold stored in their safes truly belongs to them.

Although gold does not generate interest, at least it won’t suddenly “disappear” due to a country’s policies.

For individuals and nations alike, gold is a form of risk hedging. The more chaotic the world, the more gold is pursued. But when news like “the Russia-Ukraine war may be ending” comes out, a sharp drop in gold prices is understandable.

Is digital gold still digital Tesla?

The most awkward asset in 2025 might be Bitcoin. Its long-term narrative is “digital gold,” but it has turned into “digital Tesla.”

According to Standard Chartered Bank, the correlation between Bitcoin and Nasdaq is now as high as 0.5, even reaching 0.8 at the beginning of the year. And with gold? Only a pitiful 0.2, even hitting zero at one point earlier this year.

In plain language: Bitcoin is now tied to tech stocks; when Nasdaq rises, it rises; when Nasdaq falls, it falls.

Everything has a cause.

Under the Trump administration, the US attitude toward Bitcoin shifted from “illegal cult” to “welcome to join.” In 2024, Bitcoin spot ETFs were approved, marking its formal integration into the US dollar system.

This was originally a good thing, proving Bitcoin’s legal status. But the problem is, once you become part of the system, it’s hard to fight against it.

Bitcoin’s initial charm was its rebellious spirit—independent of any government, not controlled by any central bank.

But now? Wall Street giants like BlackRock have become the biggest buyers, and Bitcoin’s rise and fall depend entirely on the Fed and Trump’s mood. Crypto traders now have to stay up late listening to Powell and Trump’s speeches, turning themselves into macro analysts of the dollar.

In terms of consensus, Bitcoin is still in many places around the world seen as “what is this thing,” while gold is already regarded as “something even my grandma’s grandma would like.”

Chinese grandmas’ gold bracelets and necklaces may be owned by more people than all Bitcoin HODLers worldwide.

Compared to gold, young Bitcoin still has a long way to go in evangelism.

Left hand holding gold, right hand holding Bitcoin

Many people like to choose between gold and Bitcoin, but smart investors know this is a fill-in-the-blank question.

Although central banks worldwide are madly buying gold, causing prices to soar, this process cannot continue indefinitely. When gold prices reach a certain high, issues like storage, transportation, and delivery of physical gold will arise. At that point, Bitcoin’s advantages become apparent.

Imagine a scenario where a country erupts into war, and the wealthy find gold too heavy and conspicuous to transfer quickly. At this moment, Bitcoin stored in a hardware wallet becomes the best choice. Such an event has already happened once in Russia.

Simply put, gold is a “bulky store of value,” while Bitcoin is a “lightweight store of value.”

If gold prices reach a terrifying high, and capital needs to find a similar but cheaper alternative, Bitcoin has the opportunity to gradually free itself from the gravitational pull of the dollar and Trump, attracting capital outflows from gold and returning to the realm of “digital gold.”

In summary, the relationship between Bitcoin and gold should not be seen as who replaces whom, but as inheritance and evolution.

Gold is the memory of human civilization’s wealth; Bitcoin is the imagination of wealth in the digital age.

Grandma Li, aged 70, buys gold jewelry; programmer Li Xiaoming, aged 25, hoards Bitcoin. Everyone has a bright future. **$GODS $ASR **