While often dubbed “digital gold,” Bitcoin is proving it can chart its own course, diverging from the traditional safe haven asset as market dynamics shift.
This week, gold prices slumped to their lowest point in a month, touching $3,185 per ounce. The decline highlights a move away from defensive assets, with investors showing renewed interest in riskier plays like cryptocurrencies. The downturn in gold comes just as Bitcoin enjoys a significant rally, suggesting a possible decoupling between the two stores of value.
According to data from Trading Economics, gold has dropped roughly 9% since mid-April, when it peaked at $3,500. Meanwhile, Bitcoin surged by 17% during the same period, climbing from $88,200 to $103,600, according to CoinGecko.
The price divergence has become more pronounced as trade relations between the United States and China show signs of improvement. After months of tension and retaliatory tariffs, both nations have stepped back from the brink. This week, the U.S. reduced its tariffs on Chinese imports from 145% to 30%, while China cut duties on American goods from 125% to 10%. The adjustments, valid for 90 days, became official on Wednesday via a joint announcement.
These developments have shifted investor sentiment toward more growth-oriented assets. With geopolitical tensions easing—at least temporarily—Bitcoin appears to be benefiting from the renewed appetite for high-reward opportunities.
Gold, however, has not fared as well. Noted economist and Bitcoin skeptic Peter Schiff pointed out that gold has faced a series of early-morning selloffs during the U.S. trading session. In a recent post on X (formerly Twitter), he suggested this might indicate gold moving out of American hands and into foreign portfolios, possibly in reaction to changing market dynamics.
Despite Bitcoin’s recent performance, gold remains the stronger performer on a year-to-date basis. Since January, gold has risen 23%, compared to Bitcoin’s 10% gain. Still, analysts believe that Bitcoin’s narrative as a hedge against fiat currency debasement—especially amid a weakening U.S. dollar—is gaining traction.
Meanwhile, investor interest in gold within China surged earlier this year. Ray Jia of the World Gold Council reported that Chinese gold ETFs brought in a record $6.4 billion in April, driven by local price movements and trade uncertainty. However, he noted a slowdown in May inflows, which may reflect easing anxiety over U.S.-China trade conflicts.
Though demand for gold could wane in the near term, Jia emphasized that persistent economic and geopolitical risks could support gold prices over the longer haul.
On the crypto side, Bitcoin exchange-traded funds (ETFs) in the U.S. saw heavy outflows earlier this year, but that trend has reversed dramatically. As of Tuesday, total net inflows across these products have topped $41 billion since their launch, setting a new record.
Ultimately, the recent market movement suggests that Bitcoin is gaining ground as an independent asset, not just as a digital version of gold. While both are often viewed as hedges against uncertainty, investor behavior is showing that they may respond to global developments in distinct ways.