Gold vs Bitcoin: Liquidity Stress Keeps Gold in Control as Bitcoin Lags
By Muhammad Umair | Published: Dec 24, 2025
Key Highlights
- Gold prices surged above $4,500 due to safe-haven demand amid fiscal stress and tight liquidity.
- Bitcoin remains weak, trading below $100,000, with bearish signals linked to liquidity issues and macroeconomic uncertainty.
- The Bitcoin-to-Gold ratio indicates gold's dominance in the current market environment.
Gold's Performance
Gold (XAU) has reached a new all-time high near $4,500, driven by increased demand for safe-haven assets amidst fiscal risks and a weakening U.S. dollar. The price of silver (XAG) also saw significant gains, breaking the $70 per ounce mark and outperforming gold in percentage terms.
Bitcoin's Struggles
In contrast, Bitcoin (BTC) has struggled to maintain momentum, remaining below the $100,000 threshold. A potential drop below $80,000 could trigger further declines. The current market conditions reflect a lack of liquidity, as indicated by the rising Secured Overnight Financing Rate (SOFR), which has surpassed the Federal Reserve's Interest on Reserve Balances (IORB), signaling tighter lending conditions.
Market Dynamics
The bond market is also showing signs of stress, with U.S. 10-year Treasury yields testing resistance levels. If yields break above 4.20%, they could target higher levels, indicating growing concerns over fiscal debt and currency debasement.
Bitcoin-to-Gold Ratio
The Bitcoin-to-Gold ratio has declined, indicating ongoing bearish pressure on Bitcoin while gold continues to show bullish momentum. This trend suggests that gold is currently the preferred asset among investors, particularly in light of economic uncertainties.
Capital Rotation and Future Outlook
Gold's market capitalization is nearing $31 trillion, while Bitcoin's stands at approximately $1.74 trillion. This significant disparity raises questions about potential capital rotation from gold to Bitcoin, although such a shift may only occur if gold's momentum wanes and Bitcoin can break key resistance levels.
Currently, Bitcoin traders are exhibiting caution, with price action showing volatility compression and a lack of upward momentum. A decisive break above $100,000 is necessary to reverse the current downtrend.