Gold at record highs: what it means for Bitcoin
Gold has surged to fresh all-time highs above $3,480/oz, rising nearly 40% over the past year. What does it mean for Bitcoin?
2 Sept 2025
Opinions
Jasper De Maere
Gold has surged to fresh all-time highs above $3,480/oz, rising nearly 40% over the past year. The rally reflects more than just inflation hedging, it’s a story of fiat debasement, strained policy credibility, and historic central-bank demand. Bitcoin, with a $2.2T market cap, sits in gold’s shadow but follows its own playbook. In the short term, the dynamics of their underlying drivers may decouple, with gold supported by structural reserves and BTC still trading like high-beta tech. But that doesn’t rule out both assets rallying into year-end. Different drivers, same direction…
Gold is trading near all-time highs at $3,486 per ounce (as of September 2, 2025), up nearly 40% over the past year. The rally is not just about inflation hedging, it is unfolding amid a complex macro backdrop: the Federal Reserve is preparing to cut rates, inflation (Headline CPI) remains sticky at 2.7%, growth data is softening, and geopolitical risks are elevated.
At first glance this might appear puzzling. But in reality, the drivers are consistent. Gold is rallying not simply because of inflation but because investors see weakening fiat credibility, policy uncertainty, and growing demand from both private and official sectors.
The FED is widely expected to cut rates at its September 17 meeting, with the markets pricing in ~92% probability of a 25 bps cut to the 4.00-4.25% target range. At the same time, the 10y treasury yield remains relatively elevated, offering 4.28%, making real returns still attractive, yet gold continues to draw flows.
The underlying driver is credibility. Inflation at 2.7–2.8% remains above target. Cutting rates while inflation lingers signals the Fed may be willing to live with higher inflation to protect growth. That is the classic recipe for stagflation: slowing economic activity alongside sticky prices.
Gold has historically thrived in such regimes. In the 1970s, stagflation eroded confidence in monetary policy, and gold became the asset of last resort. Today, investors once again treat gold as the ultimate hedge when policy signals uncertainty rather than clarity.
Beyond the cyclical monetary policy, it seems three other structural trends are reinforcing this rally:
Wars in Europe and the Middle East, combined with rising U.S.–China frictions, are now a constant backdrop. Sovereign debt carries sanction and counterparty risks. Gold does not. For a century, it has provided neutrality in times of conflict and remains the only reserve asset free of political conditions.
Major fiat currencies are weakening simultaneously. The euro, yen, and yuan face domestic imbalances, while the U.S. dollar is burdened by persistent fiscal deficits and monetary easing. Gold, untethered from any single government balance sheet, benefits from this broad erosion of fiat credibility.
The scale of official demand is historic. Global reserves have now surpassed U.S. Treasury holdings for the first time in 30 years, marking a decisive diversification away from the dollar system. Over the past five years, central banks as a group have chosen to buy almost one in every eight ounces produced by global gold mining, with their demand outweighing inflows into gold-backed ETFs by more than five times. As a result, foreign (vs U.S.) central banks are now holding more gold than U.S. treasuries for the first time again since the early 90s.
Source: Bloomberg, Tavi Costa
→ These three forces together mean gold is not just a crisis hedge. It is being re-established as a core reserve asset in a world where confidence in fiat money, U.S. debt, and geopolitical stability is eroding at the same time, which last happened all together in the ‘70s.
Bitcoin, with a market cap of around $2.2 trillion, sits in gold’s shadow but is charting its own path. Both assets share the qualities of scarcity and self-custody outside traditional finance, yet the forces shaping their performance differ.
There are arguments for both positive and negative correlation between Bitcoin and gold, but the outcome often depends on which set of drivers is shaping broader market sentiment at the time.
On the positive side, (i) gold’s rally reinforces Bitcoin’s “digital gold” narrative. Both assets are scarce and outside the fiat system, and if institutions are increasing allocations to hard assets, Bitcoin is the higher-beta expression of the same theme. (ii) Spot ETF inflows and corporate stockpiling play a role similar to central-bank demand in gold, while ongoing concerns about policy credibility and easing into sticky inflation support the broader hard-asset trade.
On the negative side, (i) Bitcoin still carries a higher risk premium. Central banks buy gold, not BTC, and Bitcoin remains more exposed to regulatory uncertainty, tech adoption risk, and speculative flows. That leaves it more cyclical, trading in line with liquidity conditions and often behaving like high-beta tech equities rather than a structural reserve asset.
An “everything rally” is when nearly all major assets, stocks, bonds, gold, and even Bitcoin, rise together, instead of moving in opposite directions. It typically happens when central banks pivot toward easier policy, loosening financial conditions and boosting investor confidence. That’s the setup today: The Fed is signaling it will tolerate higher inflation to protect jobs and growth, U.S. politics (with Trump’s pro-crypto stance) are adding a clear pro-risk tilt, and liquidity conditions, from rate cuts to fiscal deficits, remain supportive.
The forces driving gold and Bitcoin may be different, reserves and fiat debasement for gold, adoption and liquidity for Bitcoin, but in a risk-on environment, both can still climb at the same time. That keeps the door open for an “everything rally” into year-end.
The current balance between positive and negative in the very near term, the balance of drivers favors decoupling. Gold is supported by structural reserve demand and fiat debasement, while Bitcoin remains more sensitive to liquidity cycles and positioning. With rate cuts already priced in, the September (17) FOMC leaves limited room for BTC to rally into the event.
Beyond that, markets are digesting macro headlines quickly, with politics, Trump’s pro-crypto stance and broader rotation hopes, becoming a more decisive driver of sentiment. Yields remain elevated, underscoring that gold’s bid is not about falling rates but about fiat debasement and central-bank accumulation.
Over time, correlations between gold and Bitcoin tend to strengthen in bull markets. The drivers are different, reserves for gold, adoption and technology narratives for Bitcoin, but that does not rule out both assets rallying into year-end. Gold is rising as the established reserve of last resort, while Bitcoin advances on adoption-driven forces. Even if the paths diverge at times, both assets can still climb together in a risk-on cycle, different drivers, same direction
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