Wall Street’s case for Bitcoin as a hedge took a big hit this week after traders called it one of the steepest declines since 2022, according to Bloomberg.
OG crypto, once treated as “digital gold” by investors, fell as more than $19 billion in leveraged positions were wiped out in less than 24 hours, making it the largest single-day liquidation in market history.
The crash was so massive that Bitcoin fell from about $125,000 to $102,000 in a matter of hours, revealing how closely Satoshi’s dream still is tied to risky assets, rather than acting as a shield against them.
For most of this year, Bitcoin has thrived on a new narrative. Exchange-traded funds have attracted billions of dollars, and Wall Street’s biggest names have also flown in.
BlackRock’s iShares Bitcoin Trust (IBIT) has grown to $91 billion in assets, trailing the SPDR Gold Shares (GLD) fund’s $136 billion in assets, but investors said the symbolic competition would prove whether cryptocurrencies could actually rival gold as a store of value.
That race is over for now. Gold has regained its dominance, but Bitcoin’s credibility as a safe-haven asset looks weaker than ever.
Gold rises after President Trump warns of tariffs on China
President Donald Trump’s threat of new tariffs on China sent investors into a panic. Gold soared to an all-time high of over $4,200 an ounce today, while Bitcoin fell in tandem with stocks and oil.
This decline once again showed that token prices are still highly dependent on risk appetite and leverage rather than fear and capital preservation.
“I’ve never considered Bitcoin to be a safe asset. I’ve always believed it to be a speculative risk asset,” said Michael O’Rourke, chief market strategist at Jones Trading. Gold’s reputation as a store of value remains intact over the centuries. So with GLD assets exceeding $130 billion and IBIT hovering near $91 billion, investors are turning back to bullion as volatility spikes.
Even when volatility is taken into account, gold still outperforms Bitcoin. According to the Sharpe Ratio, which tracks risk-adjusted returns, as of October 14, gold was at 3, the highest in a year. Bitcoin has fallen to 1.91 from 3.68 in January. While gold’s rally has been more stable, Bitcoin’s rally has been fueled by momentum that disappears when the market panics.
Analysts call gold the new Bitcoin amid liquidity crunch
Market veteran Ed Yardeni, Head of Yardeni Research, said: said “Gold is the new Bitcoin,” the customer said on Wednesday. He writes that investors now view gold as a “physical Bitcoin,” a more reliable hedge against rising geopolitical tensions.
Yardeni noted that both assets have posted strong returns this year, but gold is in the lead by a wide margin, rising 60% in 2025 compared to Bitcoin’s 20% rise.
Gold’s strength has been notable over the past month, rising 13% while Bitcoin has fallen 3%. In the past week alone, gold is up 4% while Bitcoin is down 9% and the Nasdaq Composite is down 1%. This is a reminder that the token continues to trade like a tech stock rather than a hedge. Yardeni expects gold to reach $5,000 in 2026 and perhaps $10,000 by the end of the decade.
Yardeni blamed Bitcoin’s decline on liquidity pressures. He said exchanges have triggered automatic deleveraging to limit damage from market collapses, forcing profitable and even hedge traders to close positions to protect their balance sheets. Market makers retreated, spreads widened, and no buyers were strong enough to absorb the avalanche of sell orders.
Meanwhile, gold’s rally was helped by Trump’s tariff threats as traders sought protection from policy shocks and global instability. “Investors seeking protection from increasing geopolitical risks are heading to the hills to mine not only silver but also gold,” Yardeni said.
Bitcoin enthusiasts argue that institutional participation through ETFs proves the asset’s maturity and that the crash is temporary. Critics counter that as long as Bitcoin behaves like a high-beta stock, the dream of being a hedge will remain an illusion.
This number leaves little doubt. While gold funds continue to see steady inflows as part of what traders call “subsidence trading,” Bitcoin’s momentum has slowed. The token may still be a symbol of speculative finance, but gold has once again taken center stage for investors seeking safety in a Trump-era world of tariffs, inflation concerns and geopolitical friction.
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