Bitcoin is being sold off sharply on Friday morning during Asian hours, dropping more than 5% from $89,000 to as low as $83,400 in U.S. daytime trading. Unlike gold and stocks, it is unable to recover: This situation highlights Bitcoin's identity crisis as it is referred to as 'digital gold.'
The market is currently re-evaluating trust in currencies and institutions, but this trust is not directed towards crypto wallets; instead, it is towards gold vaults.
The Same Storm, Different Outcomes
The sharp sales wave is triggered by President Trump threatening military operations against Iran on Truth Social, stating that intervention would occur if a nuclear agreement is not reached. While governments in the Middle East try to bring both sides to the table, their efforts yield no results, and the U.S. is sending more military forces to the region. With the added possibility of a government shutdown, fears of risk aversion in the market are intensifying.
In this environment, gold is practically experiencing a roller-coaster: It drops to $5,250 with a 7% decline in one hour, then exhibits a dramatic V-shaped recovery. The Kobeissi Letter emphasizes that gold's market value changed by as much as $5.5 trillion in this session: This is the largest daily volatility to date. In Asian trading on Friday morning, spot gold again exceeds the $5,400 level, showing an approximate 1% increase.
U.S. stocks are showing resilience. The Nasdaq is down only 0.7%, largely due to a 10% drop in Microsoft driven by concerns over AI spending. However, Meta rises 10% with a strong balance sheet, while the Dow Jones closes slightly up.
In Bitcoin, however, a completely different picture is emerging. The price, which fell to $83,400, can reach $84,200 with a weak recovery; the V-shaped response of gold or the selective rise in technology stocks is not observed in Bitcoin.
Excitement in Precious Metals, Calm in Bitcoin
A clear divergence in prices is evident. Just this month, gold has gained over 25% in value, almost doubling since a year before Trump's second presidential term began. Silver has surged nearly fourfold, jumping from below $30 to above $118 since the 'liberation day' tariffs in April. Some analysts view these moves as signs of a bubble, arguing that speculative madness has occurred.
According to experts, this rise in precious metals indicates more than just temporary stress: It reflects the beginning of a loss of confidence in currencies, institutions, and the post-Cold War economic order.
Trump's aggressive policies: punitive tariffs, threats to Greenland and Iran, pressures on the Federal Reserve, and the initiation of a criminal investigation against President Jerome Powell are directing investors to traditional safe havens. The dollar index dropped to its lowest level in four years on Wednesday.
Central banks are increasing their gold reserves to move away from U.S. Treasuries. Individual investors are also flocking to gold, enchanted by both the safe-haven narrative and the allure of rising momentum.
Underlying Structural Weakness
However, Bitcoin, which is claimed to provide protection against currency depreciation due to its theoretical appeal likened to gold, cannot participate in this strong buying wave.
The recent price movement reveals long-standing weaknesses in the cryptocurrency market. Bitcoin spot ETFs have been experiencing continuous outflows since January: Total assets peaked at $169 billion in October, while today it is declining to the $114 billion level. This indicates a 32% drop.
The Coinbase Premium Index is known as an indicator measuring the price difference between Coinbase and the global cryptocurrency exchange, as well as the interest of U.S. institutions; it has now entered negative territory. Both indicators suggest that institutional interest, which carries the 2024-2025 rally, is losing strength.
On-chain data shows that individual demand has also significantly contracted. As both institutional and individual investors step back, the momentum of rises weakens, while declines are more severe.
When we examine the individual side, according to CryptoQuant data, small transfers in the range of $0-10,000 are consistently decreasing; the 30-day demand growth was over 10% in October, but is now retracting to around -6%.
In short, both institutional and individual demand are simultaneously extinguishing; therefore, rises are short-lived while pullbacks are severe.
The session that took place on Wednesday is practically applying an instant stress test to the market. Gold continues to be the first safe haven sought during crises. Technology stocks can challenge macro uncertainty with strong fundamentals. Bitcoin, however, remains outside of these two roles: It faces downward pressure from risky assets but cannot exhibit the rise typical of safe havens.
For the narrative of 'digital gold' to regain strength, Bitcoin must demonstrate a safe-haven reflex during crises. Until then, this title remains nothing more than a dream.
