Gold experienced one of its steepest single-day declines in more than five years, erasing an estimated $2.1 trillion in market value—an amount equivalent to over half of the entire cryptocurrency market. On Tuesday, October 21, the precious metal fell 5.3% to $4,125 per ounce, retreating sharply from its record high of $4,260 reached just a day earlier. The plunge is seen as a wave of profit-taking after gold’s extraordinary rally over the past month.
Gold’s impressive two-month climb had significantly outperformed Bitcoin, with the BTC-to-gold ratio dropping nearly 30% since mid-August to its lowest level since the tariff-driven volatility in April under President Donald Trump. During that same period, Bitcoin slipped around 12%, while gold soared close to 30%, cementing its position as one of 2025’s best-performing assets.
Analysts say the metal’s rise was driven by a “risk-off” sentiment as investors sought safety amid escalating trade tensions and a weakening economic outlook. Expectations that the U.S. Federal Reserve will cut interest rates later this month—an outcome seen as 99% likely by the CME FedWatch tool—also fueled the rush into gold. Lower rates typically diminish the appeal of cash and bonds, making non-yielding assets like gold more attractive. Central banks, sovereign wealth funds, and individual investors all increased their holdings during the run-up.
However, as traders locked in profits, the sharp pullback in gold prices appeared to trigger renewed momentum in the crypto market. Bitcoin rebounded to $113,800 on Tuesday after briefly slipping below $108,000 before later easing back to around $108,125, according to CoinMarketCap. Horizon analyst Joe Consorti described the move as “the early stages of an aggressive catch-up trade,” suggesting fund managers are rotating back into riskier assets in anticipation of a softer monetary stance and easing geopolitical stress.
Research from Bitwise indicates that even a modest reallocation from gold’s $17 trillion market into Bitcoin could have a dramatic effect on crypto prices. A shift of just 2% of gold’s market value, the firm estimates, could propel Bitcoin’s price beyond $161,000.
Still, the short-term outlook remains uncertain as long-term Bitcoin holders continue to sell off at accelerating rates. Data from Glassnode shows that daily sales by long-term holders have risen from roughly 12,500 BTC in early July to 22,500 BTC in recent weeks—signalling “excessive net distribution” rather than passive profit-taking.
Veteran trader Peter Brandt underscored the magnitude of the event, noting that gold’s $2.1 trillion value loss equals roughly 55% of the total cryptocurrency market capitalisation. The rare convergence of a gold sell-off and a Bitcoin rebound could mark a pivotal moment in how investors weigh traditional safe havens against digital alternatives.
