Following a brief rally that lasted five days, Bitcoin has resumed its downward trend, experiencing a 1% decline overnight and settling at $87,000. This decline reflects a broader risk-off sentiment across global markets, with S&P 500 futures dipping 0.19% after a strong increase of 1.55% in the previous session. Market movements in Asia presented a mixed picture this morning, while European markets showed cautious trading, remaining flat to slightly down.
The shift in sentiment surrounding cryptocurrencies, particularly Bitcoin, has become increasingly evident. Until October 6, Bitcoin had been moving positively alongside gold, albeit not in perfect synchrony. Both assets saw gains amid a “safe haven” narrative linked to rising stock prices, despite concerns over an AI-related bubble in tech stocks. Notably, record highs for both Bitcoin and gold were noted during the U.S. government shutdown, leading some analysts, including those from Deutsche Bank, to predict that Bitcoin could be adopted as a new reserve asset by global central banks, although they acknowledged its lack of backing by tangible assets.
However, a month later, the argument that Bitcoin functions as “digital gold” and serves as a reliable “store of value” appears increasingly fragile. While Bitcoin’s total market capitalization has decreased by around 24%—over $1 trillion—since its recent peak, gold is surging toward new highs. ActivTrades analyst Carolane de Palmas noted that gold has had an exceptional year, with prices climbing over 50% in 2025, marking its best performance since 1979.
Two principal factors are contributing to the growing disconnect between the performance of gold and Bitcoin. Firstly, the Bitcoin ETF market has seen significant unwinding in recent days. The launch of Bitcoin ETFs had previously sparked substantial interest, attracting retail investors who were hesitant to engage with cryptocurrency directly. However, the recent price downturn has led to massive outflows from these funds—Deutsche Bank reports that every $1 billion that exits a Bitcoin ETF corresponds to a 3.4% decline in Bitcoin’s price.
Secondly, the increasing demand for gold has been driven by Tether, the issuer of the USDT stablecoin. Tether has emerged as a significant purchaser of gold, buying at levels comparable to central banks. By maintaining a 1:1 peg with the U.S. dollar, Tether has backed its USDT by dollars, bonds, and gold bullion. In 2025 alone, Tether’s gold purchases are estimated to represent 12% of total central bank gold buying, according to Jefferies.
As Bitcoin prices drop, many crypto investors are gravitating towards stablecoins like USDT for stability, prompting an increase in gold purchases to back these stablecoins. This trend consequently pushes up gold prices further, creating a feedback loop that exacerbates the divergence between Bitcoin and gold.
In summary, market sentiment remains cautious, with a snapshot of key indices prior to the opening bell in New York showing S&P 500 futures down 0.19%. The STOXX Europe 600 has dipped 0.15%, while the FTSE 100 is flat. In Asia, Japan’s Nikkei 225 is steady, China’s CSI 300 has risen by 0.95%, and South Korea’s KOSPI is up 0.3%. In contrast, India’s NIFTY 50 has seen a slight decline of 0.29%, while Bitcoin stands at $87,000.
