4E Observation: Why Did Gold Prices Soar While Bitcoin Failed to Follow the Uptrend?

Since the beginning of 2025, international gold prices have continuously set historical records, approaching $3000, with an increase of over 11.7% this year. In contrast, Bitcoin, known as "digital gold," has shown weakness, continuing to fluctuate downward, with its performance this year far inferior to that of gold. The rise and fall between these two assets not only reflect simple price fluctuations but also mirror their unique positioning in the market.

Why has gold price surged to new highs this year?

From a macro perspective, the global central bank gold buying spree since Q3 2024, along with the inflation expectations and risk aversion stemming from the uncertainty of Trump's policies, have all contributed to the upward movement of gold prices, which serves as the fundamental support for the rise in gold prices.

However, neither the scarcity of gold nor the central banks' buying behavior has seen significant changes recently. The most direct reason for the rapid rise in gold prices comes from the technical level: concerns over tariffs have led to cross-market arbitrage behavior, creating substantial demand for gold purchases.

Since Trump's election, expectations regarding tariff policies have intensified, heightening market concerns about the U.S. imposing tariffs on precious metal imports. This has prompted U.S. traders to start stockpiling physical gold, leading to a preliminary rise in COMEX gold futures, which resulted in a significant price gap with London gold. Statistics show that since the beginning of this year, the London spot gold price has consistently been about $20/ounce lower than the New York market, at one point exceeding $70/ounce by the end of January.

The widening price gap has stimulated cross-market futures and spot arbitrage behavior, with arbitrageurs buying physical gold in London and transporting it to New York while simultaneously selling an equivalent amount of gold futures to lock in the price difference. The backdrop of Trump's tariff concerns has greatly stimulated market sentiment, leading U.S. traders and investors to continuously buy gold futures to hedge against potential future cost increases. This strong buying pressure has offset the selling pressure from arbitrageurs, even pushing COMEX futures prices higher, ultimately technically driving up gold prices in both locations.

According to Wind data, starting from November 7, 2024, COMEX (New York Mercantile Exchange) gold inventories began to increase rapidly, growing from about 17.2 million troy ounces in early November 2024 to 34.6 million troy ounces by early February 2025, an increase of over 101% in three months. In contrast, London gold inventories have significantly decreased.

The rise in gold prices and the significant increase in COMEX gold inventories occurred simultaneously.

Why is Bitcoin not following gold?

Bitcoin has rapidly developed over the past decade, continuously breaking milestones, and is seen as "digital gold" due to its similarities with gold in terms of scarcity, medium of exchange, inflation hedging, and value storage.

However, historical data shows that the value correlation between Bitcoin and gold is not significant. When Bitcoin reached historical highs in 2017 and 2021, gold prices were at cyclical lows. Starting in 2024, both have risen simultaneously due to factors such as the central bank gold buying spree and the approval of Bitcoin ETFs. This indicates that their correlation is driven by episodic events rather than an inherent logical connection of value. Recently, both gold and Bitcoin have been affected by the uncertainty caused by Trump's tariff policies, but they have exhibited distinctly different trends, further confirming this point.

This contradiction stems from the differences in their attributes: gold's safe-haven function relies on its physical properties and historical consensus, while the narrative of Bitcoin as digital gold depends more on market sentiment and technical expectations built over decades of price increases.

However, Bitcoin is not without its "digital gold" safe-haven attributes. During extreme events, such as rapid currency devaluation in countries like Turkey, as well as conflicts in the Middle East and the Russia-Ukraine conflict, BTC has surged significantly, reflecting its characteristics as a safe-haven asset.

The reason behind this is that, under severe inflation expectations, the common method for ordinary citizens to protect their assets is to choose gold as hard currency. However, governments may impose strict economic controls, restricting or even confiscating gold, foreign currency, etc. Only Bitcoin's value and transmission network do not rely on government financial institutions, and it has no physical presence, allowing ordinary people to carry it anywhere without regulation. Especially in the face of war scenarios, BTC is actually the best asset, superior to gold and strong currencies.

The correlation between Bitcoin and U.S. stocks has surged

More often, Bitcoin is classified as a "risk asset," with its price movements showing a significant positive correlation with U.S. stocks, often viewed as a large tech stock. This correlation peaked in 2021, with both hitting historical highs before retracing, then synchronously bottoming out and rebounding at the end of 2022, followed by fluctuations and rises in 2023, and a significant increase and retracement in 2024, continuously breaking new highs, demonstrating remarkable consistency.

This also reflects changes in the funding structure of the crypto market: before 2020, the main participants in the market were primarily Chinese funds, resulting in a lower correlation with U.S. stocks; afterward, a large number of U.S. institutions entered the market, allowing the crypto space to adopt a U.S. stock paradigm. It can be simply understood that the current funds in the crypto space are mainly money that has overflowed from the U.S. stock market.

Although Bitcoin's price currently shows a weak trend and has not been able to refresh historical highs alongside gold, this phase of fluctuation and adjustment does not represent the end of its shining moments. On the contrary, it is in a critical period of transformation, gradually evolving from a high-risk speculative asset into an important component of global asset allocation. The continuous buying actions of institutional investors, Trump's crypto-friendly policies, and the proactive promotion of Bitcoin as a national reserve collectively establish Bitcoin as an asset allocation option that cannot be ignored by sovereign wealth funds and more large institutional investors.

The 4E trading platform, as the official partner of the Argentine national team, supports assets such as cryptocurrencies, gold, U.S. stocks, indices, and foreign exchange, offering one-stop trading for USDT. Recently, it has also launched stablecoin financial products with an annual yield of 8%, providing investors with potential hedging options. With the help of 4E, investors can keep up with market dynamics, flexibly adjust strategies, and seize every potential opportunity.