A sharp divergence between gold and Bitcoin has emerged in global markets. While the price of an ounce of gold exceeded $4,000 for the first time in history, Bitcoin fell below $122,000 amid a strengthening dollar. The DXY index reached a two-month high, putting pressure on dollar-denominated assets.
Bitcoin loses ground under pressure from a strong dollar
After an unsuccessful attempt to consolidate above the key $126,000 level at the beginning of the week, Bitcoin fell by 2.4% and is trading around $123,000, according to CoinDesk. The Coindesk 20 index dropped more than 4% to 4,186 points.
The rise of the dollar index to 98.90—a high since early August—became the main pressure factor. A stronger dollar traditionally negatively affects the value of USD-denominated assets, including gold and Bitcoin.
The technical picture indicates a likelihood of further BTC decline to $118,000 if buyers do not hold the current range.
Earlier this week, Bitcoin set a new all-time high above $126,000, driven by record inflows into spot ETFs exceeding $3 billion for the week. However, the dollar’s rise and profit-taking by investors temporarily halted the rally.
Gold hits new all-time high
Unlike Bitcoin, gold continues its rapid ascent. The price per ounce exceeded $4,000 for the first time in history, setting a new record. According to ING, the growth driver was inflows into gold-backed funds (ETFs).
“Investors are actively adding positions in gold ETFs. The total amount invested has reached its highest level since September 2022, but is still far from the historical peak of 2020. If inflows continue, gold may rise even higher,” ING analysts noted.
In two years, the price of gold has doubled. Demand from central banks has become a key factor, as regulators seek to reduce dependence on the dollar. Additional support comes from Donald Trump’s trade policy and geopolitical tensions in the Middle East and Eastern Europe.
Tokenized gold rises along with physical gold
The rise in gold has also pushed up tokens backed by the precious metal. PAX Gold (PAXG) and Tether Gold (XAUT) surpassed the $4,000 mark, and the total market capitalization of gold tokens exceeded $3 billion.
Experts note that the growing interest in gold reflects a shift in investor sentiment—they are seeking safe-haven assets amid currency fluctuations and political uncertainty.
What’s next?
If the dollar index continues to rise, pressure on Bitcoin may intensify. However, if the currency market stabilizes and ETF inflows resume, digital gold may quickly regain its position.
Gold, on the other hand, may continue to move higher if demand from central banks and institutional investors persists.
Read more: BNB overtakes XRP to become the third largest digital asset by market capitalization
