After a powerful multi-month rally, gold experienced a significant crash on October 21. This marked the biggest gold price drop in over a decade, plummeting from $4,330 to $4,030 within a few hours. The market capitalization of gold decreased by $2.1 trillion in a single day. Given that this amount exceeds 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.
On Tuesday, the spot gold price fell by 6.3% after reaching an all-time high of $4,381 the previous day. Other precious metals, such as silver and platinum, also saw a similar decline. Gold futures settled at $4,087, representing the largest drop since 2013. This downturn followed over two months of a strong rally, during which investors leaned towards gold as a safe-haven asset amidst staggering U.S. debt, political turbulence, and speculations about potential rate cuts by the Federal Reserve.
Black Tuesday
Gold has had an immense year in 2025. Even after a historic downturn, its value remains 55% higher compared to the 2024 year-end price. This performance surpasses that of the years of the 9/11 attacks, the 2008 financial crisis, or the COVID-19 shutdown – periods that typically drive demand for gold.
Some analysts had warned investors that the gold price had become overheated. For instance, a few days before the crash, in response to questions from Benzinga, the CEO of Coin Bureau, Nick Puckrin, suggested that gold might be due for a downturn. He stated that the current gold rush was a "momentum trade" and that "momentum trades have a tendency to fizzle out."
Conversely, several analysts were projecting the continuation of the uptrend. Goldman Sachs anticipated gold reaching $4,900 per ounce by December 2026, while UBS offered a more bullish prediction of $4,700 by Q1 2026.
Bloomberg cited several strategists, including Charlie Massy-Collier, who suggested that in the coming weeks, the price might consolidate at the $4,000 level. They noted that while banks will need gold for diversification away from the U.S. dollar, "at current levels, there is no rush to position for that."
Comments made by Donald Trump on Monday regarding planned trade negotiations with China—stating that "both of us will be happy"—and a hike in USD strength were cited as major factors contributing to the gold price slide. These optimistic developments stimulated investors to take profits.
Gold vs. Bitcoin
Bitcoin is frequently compared to gold as another scarce safe-haven asset. Its hard cap of 21 million units, ever-declining supply growth, and costly mining process contribute to its long-term appreciation potential, akin to gold.
Both Bitcoin and gold are viewed as debasement trade assets. A debasement trade refers to the avoidance of investment in sovereign debt and fiat currencies, as their value is excessively dependent on the actions of financial and political institutions.
Despite their common ground, there is often some rivalry and banter between gold advocates ("gold bugs") and Bitcoin proponents ("bitcoiners"). For example, experienced stockbroker Peter Schiff is a prominent Bitcoin critic who advocates for gold.
Schiff's critical stance on Bitcoin has made him somewhat of a mascot for gold and a target for jokes within the crypto community on X (formerly Twitter), as many Bitcoin proponents do not view gold as a superior asset.
Prominent figures such as Michael Saylor of MicroStrategy, Chris Burniske of ARK Invest, the Winklevoss brothers of Gemini, and Mark Cuban have argued that Bitcoin is superior to gold. They cite Bitcoin's faster price appreciation, ease of management, and the near impossibility of its total supply increasing beyond its hard cap. This latter point is contrasted with gold, as new sources of gold could potentially be discovered off-world, and scientists are experimenting with producing gold in laboratories. While current results are not yet impressive, multi-million dollar grants and investments are fueling scientific endeavors to create gold.
While gold has experienced a significant rally this year, outperforming the S&P 500, Nasdaq 100, and Bitcoin, its long-term investment potential is considered to lag behind Bitcoin and these indexes.
Scott Melker, an investor and host of The Wolf of All Streets podcast, has pointed out that compared to other top assets, gold has performed considerably worse, and "one good year doesn’t erase decades of playing catch-up."
Melker suggests examining various charts that compare gold to other top assets, which clearly illustrate gold's poorer performance. On a Bitcoin versus Gold chart, gold appears essentially flat, as during Bitcoin's existence, it has gained only around $3,000 against Bitcoin's rise of over $100,000.
“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 can outperform top indexes and Bitcoin. However, this is not a frequent occurrence. At times, gold experiences even greater losses than what was observed on Tuesday. For example, after a drop in 2012, it took gold eight years to regain its previous level.
Nevertheless, gold continues to serve as a social and political barometer, with its price tending to rise during turbulent periods. Overall, it has demonstrated less volatility than most top assets.