Why did gold experience a big pump instead of Bitcoin?

Author: Fishmarketacad, X

Compiled by: White55, Mars Finance

Why is only gold rising?

Since the unlimited quantitative easing and the devaluation of fiat currency in 2020, individuals have been paying attention to precious metals, viewing them as a means of preserving value that is unrelated to the broader market.

Gold has broken through 4300 USD, rising 25% in less than two months. Let's explore the reasons for the increase.

1. De-dollarization / Central banks of various countries compete to purchase

Central banks around the world, especially the Chinese government, have been buying gold frantically. I believe this year is likely to see over 1,000 tons of gold purchased for the fourth consecutive year, and surveys show that the Chinese government plans to continue buying.

Why? The U.S. national debt is expected to reach $37.5 trillion this year, with interest alone exceeding $1 trillion (despite tax revenues of about $4 to $5 trillion). There are only two ways to deal with such a massive debt: default or devaluation, and the U.S. never has to default because it can print more money, thereby devaluing the debt.

2. Stablecoins as a tool for socializing debt

The United States devalues its debt through monetary inflation, essentially by printing more money, which lowers the value of the dollar and causes the actual value of its debt to shrink. You should already know this, as this situation has been ongoing for decades.

The new situation is that if the United States transfers its debt into cryptocurrencies like stablecoins, it could be interesting because stablecoins are more accessible to the world.

Stablecoins are increasingly backed by loans. Dollar-pegged stablecoins like USDT and USDC are now primarily supported by U.S. Treasuries. What was originally a pure 1:1 instrument has gradually turned into more than 90% backed by U.S. Treasuries.

So now, whenever people in other countries hold stablecoins, they are indirectly purchasing U.S. debt. This has globalized America's “inflation tax.” The higher the global adoption rate of U.S. stablecoins (which will reach trillions of dollars), the more the U.S. can export debt to the world and share its “losses” with the world (rather than just within the U.S.).

If this is indeed part of the plan, then it goes back to the previously mentioned reasons for the demand for de-dollarization, and why gold is a relatively safe store of value alternative.

3. Physical extrusion

Another point is that this rise in gold is not solely driven by paper/derivatives. If you understand that when the open interest of options contracts exceeds the liquidity of a certain token, a short squeeze phenomenon may occur in the perpetual contract market, the situation here is similar.

In 2025, the open contracts for gold futures on the New York Commodity Exchange (COMEX) typically number in the hundreds of thousands (each representing 100 troy ounces), while the total amount of physical gold registered for delivery is only a small fraction of that.

This means that at any given time, the subscription volume of physical gold far exceeds the quantity available for delivery. This is why the delivery time for gold extends from a few days to several weeks, with actual physical demand (similar to spot demand), and this demand is unlikely to be from weak hands, thus forming a structural bottom.

4. Overall Uncertainty

Gold has once again proven its status as a safe-haven asset during times of uncertainty. The current US-China competition, concerns over the trade war, domestic turmoil in the United States, the Federal Reserve's interest rate cuts, the US economy being supported by AI infrastructure spending, and economic uncertainty—these factors have all led global investors to flee the dollar in favor of investing in gold.

In my opinion, gold mainly declines when there is no need for safe-haven, and the following conditions need to be met, but it is unlikely to occur in the short term:

High employment rate: But the current economic outlook in the United States is not good.

Risk asset rotation: Current stocks are not cheap.

Political Certainty: The United States Needs to Get Along with China

Rising interest rates mean rising capital costs: the current situation is just the opposite.

Due to the unpredictability of Trump's words and actions, these factors may also change rapidly (or at least the external perceptions of them), so caution is advised.

What does this mean for Bitcoin?

Bitcoin has fallen more than 25% this year compared to gold. Although Bitcoin shares many similarities with gold, individuals still believe that Bitcoin does not yet meet the criteria to become “digital gold”. However, over time, Bitcoin is getting closer to gold (although it is still unclear how to address the quantum issue).

However, if you have tried to buy gold, you will know that the physical buying and selling price difference is very high, so gold is an asset that is held after purchase, which is not interesting. Therefore, retail investors may choose to buy Bitcoin instead of gold, but the purchasing power of retail investors is relatively low compared to central banks.

The current high degree of correlation between Bitcoin and U.S. politics may actually deter other central banks from de-dollarization through the purchase of Bitcoin. I personally believe that American miners currently account for about 38% of Bitcoin's hash power, while U.S. entities (exchange-traded funds, publicly traded companies, trusts, and the government) control about 15% of the total Bitcoin supply, and this proportion is likely to continue growing.

So… individuals are not clear about how Bitcoin is performing relative to gold, but in the short term (until this year), it will continue to put pressure on gold.

What is the individual doing?

Going long on Bitcoin: Personally, I believe that de-dollarization is more beneficial for Bitcoin than for other altcoins. Moreover, after the recent “1011” crash, it is clear that Bitcoin is the only asset with real order book liquidity and buying pressure, and currently, Bitcoin's dominance seems to be on an upward trend. If altcoins perform well, I might end this trade, but usually after Bitcoin hits a new all-time high, which should enhance Bitcoin's dominance.

Going long on gold: essentially, this means buying paper gold, selling put options, or buying call options. However, the saying “not your keys, not your coins” also applies here; you might just be holding a worthless piece of paper, but personally, I still find it acceptable.

Conclusion

Given the structural changes mentioned above, gold remains a good buying option, but a 20% - 30% pullback would not be surprising. If such a situation occurs in the short term, it could be a good opportunity for long-term buying, provided that the uncertainties mentioned above have not been resolved.

In addition, gold is about to reach a resistance level relative to the S&P 500, and its market capitalization is nearing $30 trillion. These two factors could indicate a local top, so it is advisable to wait and not blindly follow the trend.

Finally, here is another way to view gold personally, I believe there is still room for gold to rise:

If the US economy or global situation is unstable, the price of gold will rise;

If the US economy or the global situation becomes more unstable, gold prices will rise;

If the US economy or the global situation becomes more stable, the price of gold will decrease.