After a powerful multi-month rally, gold crashed on Oct. 21. It was the biggest gold price drop in more than a decade, falling from $4,330 to $4,030 in just a few hours. Gold’s market cap dropped by $2.1 trillion in a single day. As this amount is over half of the total crypto market cap, it raises the question of whether digital gold is a more reliable long-term investment than physical gold.
Summary
- On Tuesday, the spot gold price fell 6.3% after reaching an all-time high at $4,381 the previous day. Other precious metals, like silver and platinum, saw a similar flop.
- Gold futures settled at $4,087. That was the biggest drop since 2013.
- The downfall was preceded by over two months of a strong rally as people were leaning towards a safe-haven asset amid staggering U.S. debt, political turbulence, and speculations about the rate cuts by the Federal Reserve.
Black Tuesday
Gold is having an immense 2025. Even now, after a historic downturn, its value is still up 55% compared to the 2024 year-end price. That’s more than in the years of the 9/11 attacks, the 2008 financial crisis, or the COVID-19 shutdown (cataclysms that usually drive demand for gold).
Some analysts warned investors that the gold price had overheated. For instance, a few days before the crash, in response to Benzinga’s questions, the CEO of Coin Bureau, Nick Puckrin, said that gold might take a downturn. He said that the current gold rush is a “momentum trade” and “momentum trades have a tendency to fizzle out.”
Several analysts were projecting the continuation of the uptrend. Goldman Sachs saw gold reaching $4,900 per ounce by December 2026, while UBS provided a more bullish prediction: $4,700 in Q1 2026.
Bloomberg cites several strategists, including Charlie Massy-Collier, as saying that in the coming weeks, the price may consolidate at the $4,000 level. Banks will need gold to keep diversifying away from the U.S. dollar, but “at current levels, there is no rush to position for that.”
Donald Trump’s Monday comments on the planned trade negotiations with China (“both of us will be happy,” Trump said) and the USD strength hike are cited as major factors for the gold price slide. These optimistic events stimulated investors to take profits.
Gold vs Bitcoin
Bitcoin is usually compared to gold as another scarce safe-haven asset. Its 21 million-unit hard cap, ever-declining supply growth, and costly mining give it long-term appreciation akin to gold.
Both Bitcoin and gold are viewed as debasement trade assets. Debasement trade refers to the avoidance of investment in sovereign debt and fiat currencies, as their value is too dependent on the actions of financial and political institutions.
Despite common ground, there is some mutual ribbing and banter between gold bugs and bitcoiners. For instance, experienced stockbroker Peter Schiff is a prominent Bitcoin critic, advocating for gold.
Schiff’s verbal attacks on Bitcoin made him somewhat of a gold mascot and a target for jokes in crypto X, as many bitcoiners don’t see gold as a superior asset to Bitcoin.
Strategy’s Michael Saylor, ARK Invest’s Chris Burniske, Gemini’s Winklevoss brothers, and Mark Cuban were saying Bitcoin is better than gold. They cite Bitcoin’s quicker price appreciation, ease of management, and the near impossibility of a scenario in which its total supply gets higher. The latter is not the case for gold, as new sources of gold may be found off the Earth. Scientists experiment with producing gold in a lab. While the results are not impressive yet, multi-million dollar grants and investments power scientists to continue the way to create gold.
While gold has been ripping this year, outperforming the S&P 500, Nasdaq 100, Bitcoin, and, actually, any other high-cap asset, its long-term investment potential lags behind Bitcoin and these indexes.
Scott Melker, an investor and host of The Wolf of All Streets podcast, pointed out that compared to any other top asset, gold has performed far worse and “one good year doesn’t erase decades of playing catch-up.”
Melker offers to look at various charts comparing gold to other top assets, clearly showing gold’s poorer performance. On the Bitcoin vs Gold chart, gold is absolutely flat, as in the Bitcoin existence period, it gained only around $3,000 against Bitcoin’s $100,000 plus rise.
Melker points to various charts comparing gold to other top assets, clearly showing gold’s poorer performance. On the Bitcoin vs. gold chart, gold is essentially flat, as during Bitcoin’s existence it gained only around $3,000 against Bitcoin’s $100,000-plus rise.
“Nominally, you’d have more dollars on paper – but those dollars would buy less, meaning gold underperformed inflation for years. Still, it’s not as if cash did any better; the dollar itself lost significant value over that same period.”
In standout years like 2025, gold casually beats top indexes and Bitcoin. However, it doesn’t happen often. Sometimes, gold takes even greater hits than what we saw on Tuesday. For instance, after a 2012 drop, it took gold eight years to reach the same level again.
However, gold still serves as a social and political barometer, as its price tends to go up in turbulent periods and, overall, has been less volatile than most of the top assets.
