Gold on track for biggest one-day slide in five years as Bitcoin draws rotation flows

Spot gold prices dropped more than 5.3% on Tuesday to $4,125, setting up its largest single-day decline in over five years after hitting a record high of $4,260 the previous day. This retreat follows months of parabolic gains driven by rate-cut expectations and geopolitical hedging, suggesting the rally was overextended and sparking renewed interest in Bitcoin and other risk assets.

Gold had significantly outperformed Bitcoin for months, causing the BTC/gold ratio to fall to its lowest level since April 2025. Analysts previously attributed gold's surge to a "risk-off" rotation amid trade frictions and the "debasement trade" thesis, supported by expected Federal Reserve rate cuts.

However, the trend appears to be reversing, with Bitcoin climbing back toward $113,800 as fund managers shift back into riskier assets amid a dovish Fed and easing geopolitical tensions. Researchers at Bitwise suggested that even a small rotation of capital—as little as 2% to 4%—from gold's massive market cap into Bitcoin could lead to substantial price increases for BTC.

(Source：The Block)