Gold and its digital equivalent, Bitcoin (BTC), have been dancing around each other for a while now, and both assets are starting to see some promising developments.
The precious metal surged to a new all-time high this week, trading above $3,500 per ounce, while the world’s largest cryptocurrency went past the $113,000 mark again on Friday, September 5.
Investors largely attributed the gold rally to the growing possibility of U.S. interest rate cuts this month, with Suki Cooper, analyst at Standard Chartered, stating that new record highs are to be expected.
Meanwhile, Bitcoin started seeing renewed institutional interest, with BlackRock buying another $289.84 million worth of the crypto on September 3, the same day Ethereum (ETH) exchange-traded funds (ETFs) posted $135.3 million in net outflows.
Is gold outpacing Bitcoin?
So far in 2025, gold has outpaced Bitcoin with a nearly 37% year-to-date gain, compared with Bitcoin’s 22% rise.
Accordingly, Goldman Sachs suggested that the precious metal could climb to $5,000 per ounce if the Federal Reserve’s independence is undermined.
“A scenario where Fed independence is damaged would likely lead to higher inflation, lower stock and long-dated bond prices, and an erosion of the dollar’s reserve-currency status,” said analyst Samantha Dart in a note reported by Bloomberg.
The same scenario would likely see Bitcoin surge past all expectations as well, given its status as a leading digital hedge and the ongoing shifts in its market. Earlier this summer, Matt Hougan, the Chief Investment Officer at Bitwise, suggested the crypto could match gold in terms of valuation, predicting 1 BTC would be worth $1.2 million by that time.
Indeed, the aforementioned Bitcoin ETFs have drawn large-scale institutional flows, boosting the asset’s liquidity and bringing it into a closer relationship with the equity market.
Of course, gold funds have not been idle either. For instance, SPDR Gold Trust, the world’s largest ETF of its kind, saw its holdings rise 1.01% on Friday, reaching 977.68 tons, the highest in three years.
Accordingly, the complex dynamics between the two investments will necessitate a layered hedging approach. That is, while gold is likely to continue offering reliable protection against equity volatility, Bitcoin may serve as a counterbalance during periods of bond market stress.
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