One ounce of gold surpasses $4,930, revealing the market's truth when compared to Bitcoin

Recent market conditions reveal the most striking contrast to date. Gold, which hit a new record of $4,930 per ounce, continues to see strong buying momentum, while Bitcoin remains around the $87,990 level, widening the gap from initial expectations. Behind this dichotomy lies a change in market sentiment that goes beyond mere price fluctuations.

Precious Metals and Cryptocurrencies: The Past 14 Months of Divergence

During Thursday’s US trading hours, gold surged an additional 1.7%, soaring to $4,930. On the same day, silver also rose 3.7%, reaching $96 per ounce, demonstrating that the overall buying momentum in precious metals remains unabated.

Meanwhile, Bitcoin’s lag is conspicuous. Over the past 14 months since President Trump’s victory in the November 2024 election, Bitcoin has lagged behind nearly all major assets. Specifically, while Bitcoin declined by 2.6%, silver increased by 205%, gold by 83%, the Nasdaq by 24%, and the S&P 500 by 17.6%.

From a peak near $126,000 recorded in early October, it has now fallen approximately 30%, prompting questions among many market participants.

Has the Bitcoin Adoption Story Truly Ended?

Jim Bianco, head of Bianco Research, argues that the bullish catalysts for Bitcoin adoption are beginning to fade. He pointed out on X that “announcements related to adoption no longer have the power to move the market.” There is concern that Bitcoin is becoming an asset for profit-taking by investors holding long-term positions.

In contrast, Bloomberg senior ETF analyst Eric Balchunas offers a different perspective. Looking at the roughly 20-month rise from below $16,000 during the crypto winter of 2022 to current levels, he emphasizes that Bitcoin has gained about 300%. He counters, “Are we expecting an uninterrupted 200% annual return?” and considers the current correction phase as a natural part of the price formation process.

As of November 2024, Bitcoin has surged 122% year-over-year, significantly outperforming gold. Balchunas points out that metals have caught up in recent months.

The ‘Silent IPO’ of Early Investors’ Profit-Taking

One factor contributing to Bitcoin’s stagnation is the activity of long-held early investors. Balchunas describes this as a “silent IPO,” where investors who have held positions for over ten years cash out to realize profits.

For example, several long-term holders have sold large amounts of their positions in recent months. Institutional investors, such as Galaxy, sold over $9 billion worth of Bitcoin in July alone. This wave of quiet selling is likely a major factor suppressing Bitcoin’s upside.

Bianco states, “Bitcoin remains stuck in a quagmire, waiting for a new theme,” suggesting that the market is increasingly awaiting the emergence of new bullish narratives.

The Psychological Gap Between Gold and Bitcoin: Extreme Bullishness vs. Deep-Rooted Fear

Market sentiment vividly contrasts between gold and Bitcoin. While the JM Bullion Gold Fear & Greed Index shows extreme greed for gold, the equivalent index for cryptocurrencies remains in a state of fear.

Gold is traditionally viewed as a “real asset” and a store of value, which tends to accelerate buying during inflation fears and risk-averse periods. Conversely, despite the narrative of Bitcoin as a “digital asset,” it is currently being traded like a high-beta risk asset.

Some interpret the rise of gold above $5,000 as overheating, but compared to the market’s bullish sentiment, investor psychology in digital assets remains deeply cautious. This fundamental disparity in sentiment underscores the core dynamics of the current market environment.