Bitcoin Falling While Gold Reaches Highs: The Debate on Cryptocurrency Returns

The contrast between precious metals and Bitcoin could not be more pronounced at this moment. While gold continues an unstoppable rise, Bitcoin keeps falling in the market, deepening the debate among analysts about the prospects of the world’s most important cryptocurrency. This divergence raises fundamental questions about the narratives that have historically driven the crypto market.

Gold Rising, Bitcoin Falling: The Market Contrast

During the US market morning session, precious metals experienced a significant rebound. Gold reached $4,930 per ounce, approaching new all-time highs, while silver rose 3.7% to $96 per ounce. In stark contrast, Bitcoin continues to decline and is around $87.83K, reflecting a drop of approximately 30% from its all-time high of $126.08K recorded in October.

The trend is unequivocal over the last 14 months: since November 2024, Bitcoin has fallen 2.6%, while silver has surged 205%, gold 83%, the Nasdaq 24%, and the S&P 500 17.6%. This divergence in returns raises questions about what is truly driving the asset markets.

End of the Adoption Narrative? Analysts Debate Bitcoin’s Performance

Jim Bianco, director of Bianco Research, suggests that the narrative of mass adoption of Bitcoin has lost its persuasive power in the market. “Adoption announcements are no longer working. A new theme is needed, and that is not yet evident,” Bianco commented on social media. According to his perspective, Bitcoin is losing ground against virtually all relevant assets in the current macroeconomic context.

However, Eric Balchunas, senior ETF analyst at Bloomberg, offers a different interpretation. Balchunas points out that Bitcoin is in a consolidation phase after an extraordinary performance: the cryptocurrency has gained approximately 300% over the past 20 months, rising from less than $16,000 at the bottom of the 2022 crypto winter. “What are you waiting for? 200% annual gains without interruptions?” he rhetorically questions.

The “Silent Public Operation”: Why Bitcoin Continues to Fall

According to Balchunas, a crucial factor behind Bitcoin’s poor performance in recent months is the selling activity of early investors. Long-term holders, after maintaining their positions for years or decades, are selling to realize gains. Balchunas calls this phenomenon the “silent public operation” of Bitcoin. A notable example was the sale of over $9 billion in BTC in July by an investor who had held their holdings for more than a decade.

This profit-taking process, while indicating market maturation, contributes to the downward pressure that explains why Bitcoin continues to fall while other assets rebound. The cryptocurrency market is also facing a shift toward risk aversion, which has directed capital toward safe-haven assets like gold, exacerbating the performance contrast.

Cryptocurrency Derivatives and Market Uncertainty

In the derivatives segment, open interest is declining along with moderate volatility. Traders are showing a growing tendency toward defensive positions, including protective put options and short positions. This defensive stance reflects the uncertainty surrounding Bitcoin’s short-term prospects.

While Bitcoin continues to fall, the CoinDesk 20 index also records significant setbacks, confirming that risk aversion extends beyond Bitcoin to the entire crypto market. In this context, the rally of precious metals appears as a refuge for investors seeking to preserve value in an environment of uncertainty.