Gold soars to $4000, crushing Bitcoin! Schiff: Flee quickly as gold depreciates by 37%

As the value of Bitcoin against gold has fallen more than 37% this year, the debate over “Is Bitcoin digital gold?” has resurfaced. Noted economist and gold advocate Peter Schiff has pointed out that the value of Bitcoin is rapidly declining and urges investors to “sell their Bitcoin and move into physical precious metals.”

What does a 37% depreciation of Bitcoin against gold mean?

(Source: Trading View)

It should be noted that “Bitcoin depreciating 37% against gold” refers to the decrease in purchasing power of Bitcoin when measured in gold, which is different from the usual discussion of US dollar depreciation. US dollar depreciation typically refers to the decrease in purchasing power of the dollar relative to other fiat currencies or tangible assets (such as gold), while “depreciation against gold” measures the relative value changes of other assets using gold as a benchmark.

For example, if at the beginning of 2025 one Bitcoin could be exchanged for 30 ounces of gold, but today it can only be exchanged for about 18.9 ounces, this represents a decline in value of about 40% when measured in gold. The change in the BTC/XAU ratio is often used to assess whether Bitcoin can truly serve as a “store of value” like gold, as a hedge against inflation and risk.

From the perspective of Bitcoin priced in USD, the cumulative increase in Bitcoin price/USD since mid-2022 has reached nearly 198%, significantly higher than gold's 117%. However, the “relative weakness” in the short term has prompted the market to re-evaluate the fundamental differences between these two assets. This also explains why the Bitcoin price in USD seems to have only fallen by 28.5%, but has depreciated by 40% against gold—because gold's USD performance has surged significantly during the same period.

Gold historical price breaks through 4000 USD to set new high

The historical price of gold has currently surpassed the historical high of 4,045 USD per ounce, which is highly significant for Taiwanese investors. Based on the current exchange rate, the price of one tael of gold has reached over 130,000 TWD, setting a historical record in Taiwan's gold market. The strong performance of gold is attributed to multiple factors, including the continuous increase in gold reserves by global central banks, rising geopolitical risks, and a surge in investor demand for traditional safe-haven assets.

In contrast, Bitcoin not only failed to sustain the momentum brought by the ETF craze and halving effect in 2024, but also performed as the worst among major assets in 2025, with its market value hovering around $1.8 trillion. This “worst” performance has subjected Bitcoin to skepticism from various parties. Schiff emphasized: “Bitcoin is not digital gold, but rather digital fool's gold,” once again questioning its hedging and value preservation capabilities.

Gold and Bitcoin have long been regarded as representatives of “sovereign-free assets”. Investors often use both as tools to counter inflation and currency depreciation. However, this year's market performance has clearly favored the gold camp. The current gold/Bitcoin exchange ratio has reached its highest level since the beginning of 2023, providing gold advocates with a new argument that “true store of value assets must be tangible, scarce, and have stood the test of time.”

Analysis of the Possibility of Gold Falling and the Dilemma of Bitcoin

The market is also discussing the possibility of a decline in gold prices. Some analysts believe that if the Federal Reserve shifts to a dovish policy or geopolitical risks ease, gold may face profit-taking pressure. However, considering the current global economic and political environment, the probability of a decline in gold is relatively low. In contrast, the difficulties faced by Bitcoin are more severe.

On Tuesday, Bitcoin briefly fell below $90,000, which is about the average entry price for ETF investors, and also means that most holders are now “stuck.” As of 11:46 AM New York time, Bitcoin slightly rebounded by about 1.5%, trading at $93,241. For many, 2025 was supposed to be the breakthrough year for cryptocurrencies, but it turns out this story feels familiar—first the frenzy, then the collapse, and finally, doubt remains.

Once known as “digital gold”, Bitcoin has now been severely surpassed by real gold. Bitcoin believers have long criticized gold as outdated, but this year, in an environment of declining interest rates and weakened risk appetite, the performance of gold, long-term government bonds, and even the Nasdaq index has far outperformed Bitcoin. Even the U.S. utility index, which has always been regarded as synonymous with “low volatility and low growth”, has outperformed Bitcoin.

For professional investors, the failure of Bitcoin is even more critical. In a diversified portfolio, it has neither managed to hedge against the stock market fall caused by tariffs nor amplified returns during the rebound. For fund managers who view cryptocurrencies as a strategic allocation, this is not just a performance issue but a crisis of belief.

October crash shadow and liquidity crisis

Key Factors of Bitcoin Big Dump

· In October, a big dump caused liquidations of 19 billion USD, and the retreat of market makers led to a liquidity drought.

· The average cost for ETF investors is around $90,000, and large-scale entrapment has triggered panic.

· Gold's strong performance attracts safe-haven funds, with central banks increasing holdings pushing gold above 4000 US dollars.

· The macro environment worsens, and the tariff war along with economic uncertainty lowers risk appetite.

· The discourse on digital gold has gone bankrupt, failing to demonstrate its hedging function and instead becoming a high-leverage speculative tool.

XBTO Trading senior trader George Mandres believes: “The impact of the crash on October 10 is much deeper than it appears; it has weakened market makers' willingness to provide liquidity and shaken investors' risk appetite.” BRN research director Timothy Misir pointed out that Asian economic data is weak, the Chinese stock market is declining, and global tech valuations are adjusting. Currently, liquidity has tightened, and cryptocurrencies are not performing like safe-haven assets; instead, they have become the most aggressive macro leverage bets.

Currently, investors are generally adopting a defensive posture. According to Deribit's options data, the probability of Bitcoin reaching a new high of $126,000 this year has fallen below 5%.

Institutional Divergence and Investment Recommendations

Despite Schiff's ongoing pessimism towards Bitcoin, there are still voices in the market with opposing views. JPMorgan pointed out in its latest research report that if institutional investors continue to enter the market, and if global economic uncertainty persists, Bitcoin could experience a new wave of growth in 2026, potentially challenging gold's status as an alternative store of value. The report also reminds investors that although Bitcoin has performed poorly this year, its volatility and market structure imply that the possibility of a rebound still exists.

Analyst Brendan Fagan stated that currently Bitcoin seems to be trying to regain its dominance, but this time not with risk signals, but with symbols of stability. If 90,000 USD can hold, it may be a turning point for the digital asset market from pressure to confidence. However, against the backdrop of gold continuing to hit new highs and the Bitcoin-to-gold ratio continuing to explore lows, the “digital gold” narrative is facing its most severe test in history.