International gold prices have consecutively fallen below the key thresholds of $4,000 and $3,900, while Bitcoin remains firmly above $112,000, marking the slow opening of a capital migration.
October 29, 2025, East 8 Time: The global asset market is experiencing a stark contrast. Spot gold plummeted over 2% within 24 hours and fell below $3,900/ounce. Although it has slightly rebounded to around $3,980/ounce today, it has dropped nearly $500/ounce from the monthly high of $4,381/ounce. Meanwhile, Bitcoin's price remains above $112,000, sharply contrasting with the weak performance of traditional safe-haven assets.
This starkly different trend reveals a profound capital rotation in the market, with investors shifting funds from traditional safe-haven asset gold to Bitcoin, which is hailed as "digital gold," increasingly showcasing the "seesaw effect."
1. Market Performance: Gold Pullback, Bitcoin Stabilization
Gold Market Faces Significant Pullback
In the past week, the gold market has experienced a dramatic "high dive." On October 28, spot gold briefly fell below $3,900/ounce, hitting a low of $3,886.3/ounce. From its peak, gold prices have dropped nearly $500/ounce in just seven trading days, from $4,381.11/ounce to $3,886.3/ounce.
This sharp decline has led to setbacks for gold-related ETF products. The world's largest gold ETF, SPDR, has seen its holdings continuously decrease since October 22, with a total reduction of 19.74 tons.
Bitcoin Shows Strong Momentum
In stark contrast to gold's dismal performance, Bitcoin has demonstrated relative stability during the same period. As of October 29, Bitcoin's price has remained around $113,000.
This differentiated performance indicates that market funds are being reallocated. Cryptocurrency analyst Sykodelic pointed out that there has been an inverse correlation between gold and Bitcoin for nearly 18 months. "Whenever gold surges, BTC enters a cooling phase; when gold consolidates or pulls back, Bitcoin experiences significant gains."
2. Drivers of Capital Rotation
Cooling Safe-Haven Demand
One of the main reasons for the recent drop in gold prices is the easing of geopolitical tensions.
● There are signs of easing in US-China trade relations, and the Russia-Ukraine conflict has also shown some signs of moderation, collectively contributing to a decline in safe-haven sentiment, putting pressure on gold prices.
Technical Selling Pressure and Profit-Taking
The rapid rise in gold prices earlier has accumulated a large amount of profit-taking positions, setting the stage for a pullback.
● Tang Linmin, a senior researcher at China International Futures, pointed out that the factors that are favorable for gold prices, such as expectations of interest rate cuts by the Federal Reserve, still exist, so the downside for gold is relatively limited.
● Analysts from Heraeus stated that precious metal prices have far exceeded their long-term moving averages, and the increase has been too large and too fast.
The weakening of short-term driving factors and the alleviation of physical shortages may lead to a prolonged pullback in precious metal prices.
Funds Shifting to High-Growth Assets
While gold prices are falling, the cryptocurrency market is seeing an influx of funds. Last week, cryptocurrency exchange-traded products (ETPs) experienced a net inflow of $921 million, with Bitcoin accounting for a substantial $931 million of that.
● James Butterfill, head of research at CoinShares, stated that CPI data "restored expectations for further interest rate cuts," promoting the flow of funds into crypto assets amid macroeconomic uncertainty.
Table: Recent Performance Comparison of Gold and Bitcoin
Indicator
Gold
Bitcoin
Recent Price Performance
Fell nearly $500/ounce from peak
Stably above $112,000
Market Sentiment
Cooling safe-haven demand
Institutional funds continue to flow in
Fund Flow
ETFs experiencing outflows
ETPs saw inflow of $931 million
Technical Indicators
Far above long-term moving averages
Relative Strength Index (RSI) was close to 32
3. Market Sentiment and Expert Opinions
Analysts Remain Optimistic About Gold's Future
Despite the short-term downward pressure on gold, analysts generally believe that the long-term upward logic for gold has not been disrupted.
● Bai Xue, senior vice president of the research and development department at Dongfang Jincheng, stated that the logic supporting gold prices has not been broken, and the recent sharp adjustment in gold is a temporary consolidation. She expects international gold prices to rise above $4,500/ounce next year.
● Analysts from the UK research firm Metals Focus stated in their annual report that ongoing economic uncertainty remains the biggest factor supporting gold prices. They expect gold prices to average around $4,560/ounce next year, a 33% increase from the average price so far this year.
Positive Outlook for Bitcoin
Market analysts generally hold an optimistic view of Bitcoin's prospects.
● Sykodelic believes that Bitcoin is currently entering the same pattern that gold completed earlier, and a breakout could push Bitcoin far above its current historical high.
● WolfDAO analysis pointed out that ending QT will reverse the $2.2 trillion balance sheet contraction since 2022, releasing funds into risk assets.
This policy could drive Bitcoin prices to rebound 10%-15% from current lows.
Table: Key Drivers of Capital Rotation
Driver
Impact on Gold
Impact on Bitcoin
Geopolitical Situation
Easing tensions weaken safe-haven demand
Improved risk appetite provides a favorable environment
Technical Factors
RSI above 85, severely overbought
RSI close to 32, deeply oversold
Institutional Behavior
Institutions taking profits
Institutional funds continue to flow into ETPs
Federal Reserve Policy
Expectations of interest rate cuts provide medium to long-term support
Expectations of ending QT inject liquidity
4. Potential Risks and Follow-Up Points
Risk Warning
● First, both the gold and Bitcoin markets face the possibility of increased short-term volatility. Although the Federal Reserve's policy shift is generally positive, the market may experience severe fluctuations due to "selling the fact."
● Second, an unexpected drop in inflation data could alter the Federal Reserve's policy path, leading to a market repricing.
● Additionally, the high volatility inherent in the cryptocurrency market cannot be ignored. According to AiCoin data, the total trading volume in the cryptocurrency market reached $17.355 billion, with total open contracts at $342 million, indicating that the market is highly active and carries hidden risks, with increased trading volume often signaling potential high volatility.
Indicator
Value
Typical Market Signal
Total Trading Volume
$17.355 billion
High market activity and strong capital attention, but also means that long and short divergences may intensify.
Total Open Contracts
$342 million
Strong willingness of derivatives market investors to hold positions, accumulating potential volatility energy.
Source: AiCoin整理
Key Observation Points
In the coming days, investors should closely monitor the following key factors:
● Details of the FOMC meeting, especially regarding plans and timelines for ending quantitative tightening.
● Subsequent developments in US-China trade relations, as any signals of renewed tension could reignite safe-haven demand.
● Fund flow direction of Bitcoin ETFs, with sustained net inflows being an important signal for solidifying the upward trend.
Market sentiment is shifting—as gold prices continue to pull back to $3,900/ounce, Bitcoin remains stable above $112,000, with funds migrating from traditional safe-haven assets to crypto assets.
This capital rotation is not coincidental; it is driven by easing geopolitical tensions, significant institutional funds entering Bitcoin ETPs, and expectations of liquidity from the Federal Reserve. The "euphoria phase" for gold seems to be coming to an end, while the stage for Bitcoin is just beginning.
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