Recently, many people are wondering why gold keeps soaring while Bitcoin remains sluggish, even though both are labeled as inflation-resistant assets. The reality is the "Debasement Trade" – the game of protecting assets when currency depreciates – is currently split into two very distinct halves.
The biggest reason lies in the story of China. Currently, China is injecting massive liquidity to address the enormous debt and save an economy that is trending away from the Renminbi. When the excess liquidity from China flows out, it immediately seeks gold and domestic securities. Unfortunately, Bitcoin is still banned here, so this huge capital simply has no way to flow into BTC. It is "trapped" in gold and traditional channels, pushing gold prices to new heights while #Bitcoin remains on the sidelines.
In addition, look at the moves of the big players like Russia and China. They are gradually losing faith in the USD and are aggressively hoarding gold for reserves. For them, gold is a tangible asset with a history of thousands of years, while Bitcoin still carries the nature of a risky "digital experiment." The so-called "Debasement Trade" is essentially just the depreciation of the Renminbi in the short to medium term, and that money chooses gold as the safest haven.
The harsh truth is that Bitcoin is currently behaving more like a "risk-on asset" than "digital gold." It is extremely sensitive to liquidity from the U.S. While gold is soaring due to liquidity from the East, Bitcoin is waiting for the cash flow from the West to return. After three continuous years of rising, the crypto market is now entering a necessary "cleansing" phase. The FOMO around ETF funds has also cooled down, and the market needs a new strong narrative to reignite the upward momentum.
Don't be too pessimistic when you see Bitcoin not following gold. Each asset has its own cycle and dynamics. Bitcoin will truly "accelerate" again when liquidity in the U.S. is more abundant and a fundamental push similar to the recent ETF wave appears. Our task now is to be patient. The market needs time to shake off the excess leverage and the weak-handed players.
See you again, my friends, at new heights in the coming years, just like how it has repeated after each downturn. Now is the time to observe and find accumulation opportunities, not to panic when gold is "rising" while BTC is "going to sleep."
