Gold Plunges as Bitcoin Rises on Risk Appetite Shift

Tuesday’s trading session witnessed one of the most significant market divergences in recent memory, with gold retreating sharply from record territory while cryptocurrencies posted steady gains. According to Trading Economics data, gold fell 5.5% to $4,118 per ounce, representing the precious metal’s biggest daily decline since April 2013. This dramatic pullback came just one day after gold had surged to a record high of $4,382 per ounce, highlighting the volatility that has characterized safe-haven assets in recent weeks.

Meanwhile, Bitcoin and Ethereum moved in the opposite direction, with Bitcoin climbing as high as $114,000 during the day before settling around $112,000—a 1% increase over the past 24 hours, according to CoinGecko. Ethereum followed a similar pattern, trading as high as $4,100 earlier Tuesday before settling at approximately $4,000, representing a 0.7% gain over the same period. The inverse correlation between these asset classes signaled a notable shift in investor sentiment away from traditional safe havens and toward riskier digital assets.

Analysts identified multiple catalysts behind Tuesday’s market movements, with easing U.S.-China trade tensions emerging as a primary factor. Despite recent tariff threats, U.S. President Donald Trump indicated earlier this week that he believes China is open to ‘a really fair and really great trade deal,’ per Bloomberg reporting. The outlet further noted that Trump remains eager to meet with China’s Xi Jinping, suggesting potential diplomatic progress that could reduce global economic uncertainty.

Jake Ostrovskis, head of OTC trading at market maker Wintermute, told Decrypt that ‘plummeting gold prices reflect easing geopolitical tensions.’ He added that Tuesday’s move likely also stemmed from ‘fast money unwinding overextended long positions’ in gold, while ‘Bitcoin seems to be capitalizing on this shift, with mercenary capital finding relative value.’ Ostrovskis cautioned that ‘one day doesn’t make a trend, but it’s an interesting narrative to keep an eye on’ regarding the relationship between gold and cryptocurrency markets.

Strong corporate earnings provided additional support for risk assets, according to Carlos Guzman, a research analyst at market maker GSR. He pointed to General Motors raising guidance on reduced tariff exposure as an example of positive earnings momentum. ‘We’re off to a strong start for earnings season,’ Guzman told Decrypt, noting that crypto prices were likely buoyed by these robust results on Wall Street.

Market participants are closely watching Federal Reserve policy expectations, with Friday’s Consumer Price Index release from the Bureau of Labor Statistics looming large. Economists expect the CPI to show a 3.1% increase in the 12 months through September, indicating persistent inflationary pressures. However, Guzman noted that recent remarks from Federal Reserve officials suggest the central bank remains focused on preserving the labor market’s health, making interest rate cuts increasingly likely.

‘As long as [CPI] comes in within expectations, it should be a huge market mover,’ Guzman said, emphasizing that risk assets like stocks and crypto tend to benefit from cheaper borrowing costs. He added a note of caution: ‘If it is significantly higher than expectations, I do think that’ll be pretty bearish.’ This delicate balance between inflation data and Fed policy expectations has created a environment where risk assets could benefit from accommodative monetary policy, even amid persistent price pressures.

Guzman also addressed the recent gold rally, noting that narratives around the debasement of the U.S. dollar had fueled interest in the precious metal to the extent that the trade appeared ‘pretty crowded.’ He characterized Tuesday’s drop in gold prices as looking ‘more like a technical correction than anything else,’ suggesting the move represented a healthy market adjustment rather than a fundamental shift in gold’s long-term prospects.

Market strategists were careful to distinguish between short-term tactical moves and longer-term structural shifts. David Hernandez, a crypto investment strategist at 21Shares, an issuer of crypto-focused exchange-traded products, told Decrypt that ‘the divergence signals a tactical rotation, not a structural regime change: capital moving from an overbought safe haven into higher-risk assets with more upside.’ He added that ‘easing U.S.-China tensions briefly reduced the urgency for safe-haven exposure,’ creating conditions favorable for risk assets like Bitcoin and Ethereum.

The sentiment found echoes across social media platforms, where influential Crypto Twitter voices interpreted the day’s movements as significant. Zion Thomas, better known online as Ansem, declared ‘Finally’ in reference to a chart showing Bitcoin up and gold down. Meanwhile, Binance co-founder and former CEO Changpeng Zhao offered a more nuanced perspective, acknowledging on Monday that Bitcoin’s value would eventually surpass gold’s $28.69 trillion market cap while noting that ‘Gold won’t go to zero. But Bitcoin is better.’ This balanced view reflects the ongoing debate about whether digital assets represent a complement or replacement for traditional stores of value.

As markets await Friday’s inflation data, the dramatic Tuesday divergence between gold and cryptocurrencies serves as a reminder of how quickly capital can rotate between asset classes based on shifting macroeconomic expectations. While the movement represents a clear tactical shift toward risk assets, whether it marks the beginning of a more sustained trend will depend on forthcoming economic data, Federal Reserve policy decisions, and the evolution of global geopolitical tensions.