Why Is Gold Going Up While Bitcoin Isn't Following?

In early June 2025, international gold prices surged to a historical high of $3430 per ounce, with a year-to-date increase of over 30%. Meanwhile, Bitcoin, known as “digital gold,” has been fluctuating downward, showing weak performance. This divergence reflects a new game theory of global capital amid the Federal Reserve’s interest rate cut cycle and geopolitical uncertainties.

The macro logic of the rise in gold prices

1. Central Bank Gold Buying Surge and Dollar De-dollarization: Central banks around the world are increasing their gold reserves at an unprecedented pace, with the central banks of China, India, and Russia averaging over 1,000 tons of purchases annually in the past three years. This reflects systemic concerns about the credibility of the dollar: actions such as the U.S. freezing of Russia’s foreign exchange reserves have driven countries to reduce the share of dollar reserves from 60% in 2022 to the current 57%. Gold has become the ultimate “policy” when sovereign credit collapses.
2. Federal Reserve Rate Cuts and Dollar Weakness: The CME FedWatch Tool shows that the probability of a rate cut in September has reached 100%. The decline in interest rates directly weakens the dollar’s attractiveness, while gold priced in dollars gains natural appreciation momentum. Historical data indicates a significant negative correlation between gold and interest rates—under a low interest rate environment, bond returns decline, and funds are more inclined to flow into gold, which is non-yielding but preserves value.
3. Technical arbitrage triggered by tariff expectations: After Trump’s victory, concerns over import tariffs on precious metals surged in the market. U.S. traders rushed to “stock up” on spot gold, causing the COMEX gold futures and London gold price difference to temporarily exceed $70/ounce. Cross-market arbitrageurs flooded in: buying physical gold in London to ship to New York while shorting futures to lock in profits. Within three months, COMEX gold inventories skyrocketed by 101%, and futures prices were continuously driven higher.

The differentiation between safe-haven assets and risk assets.

• The “dual attributes” advantage of gold: Unlike cryptocurrencies, gold has both investment and consumption properties—demand for gold jewelry accounts for 48% of global annual demand, while technological applications account for 7%. This diversified demand structure provides support during economic turmoil, often causing it to rise in the opposite direction when U.S. stocks decline.
• The “risk asset” label of Bitcoin: The 30-day correlation between Bitcoin and the Nasdaq index is as high as 0.82. When institutional trading desks face fluctuations in the US stock market, they often sell Bitcoin to meet margin requirements. In March 2025, while gold rose by 16%, Bitcoin fell by 6%, highlighting the logical divergence between the two.

The challenges and opportunities of “digital gold”

Although Bitcoin demonstrates its safe-haven properties in certain scenarios (such as Turkish residents transferring assets through Bitcoin during the Russia-Ukraine conflict), its core bottlenecks lie in two points:

1. Volatility crushes gold: Bitcoin’s weekly volatility is 4.5 times that of gold, with an average decline of >2.5% occurring once every four weeks, while the Value at Risk (VaR) is up to 5 times that of gold. This undermines its credibility as a “store of value” for conservative funds.
2. Narrative relies on policy dividends: The rise of Bitcoin earlier this year was mainly due to the approval of the Bitcoin spot ETF in the United States, which brought in hundreds of billions of dollars in incremental funds. However, after the “Trump trade” (which promised to end the crackdown on cryptocurrencies) was fully priced in by the market, there was a lack of sustained momentum. In contrast, gold’s rise is supported by structural demand such as central bank purchases (accounting for 23%).

Diversified Allocation: Hedging Strategies for Web3 Investors

For cryptocurrency investors, the rise in gold is not a competitive signal, but a risk alert:

• Arbitrage opportunities for on-chain gold tokens: The gold token PAXG rises in tandem with spot gold prices, while the price difference with Bitcoin widens, providing opportunities for cross-asset hedging. On June 2, when gold rose by 1.2%, PAXG/USD increased by 1.5%, while BTC fell by 0.5%.
• Leading indicators of sovereign fund trends: If the U.S. sells 17% of its gold reserves (approximately $171.8 billion), it may shift towards allocating Bitcoin. Trump has signed the “Strategic Bitcoin Reserve Executive Order,” which, if implemented, will reshape the cryptocurrency market landscape.

Conclusion: Complementary rather than substitutive

Gold breaks through previous highs while Bitcoin stagnates, which essentially reflects the divergence between “credit hedging” and “liquidity games.” When the U.S. debt exceeds $35 trillion (increasing by $1 trillion every hundred days), both reflect the questioning of the fiat currency system but play different roles: gold serves as the ballast in the face of credit collapse, while Bitcoin acts as the receiver of liquidity overflow.

to Web3 Investors should increase their holdings in PAXG and other gold-backed assets + dollar-cost average into Bitcoin spot ETFs to form a counter-cyclical portfolio. The true narrative of “digital gold” is just beginning as the gap between gold’s market value (22.7 trillion USD) and Bitcoin’s market value (2.1 trillion USD) narrows.