Futures markets, however, are clearer. They price in a 97% chance that the Fed will pause rate hikes, following three consecutive cuts. This expectation reflects a market gradually adjusting to the central bank’s recent policy moves.

Cautious Sentiment on the Fed Side

Last month’s FOMC minutes showed that caution dominates among policymakers. Officials are carefully weighing inflation risks against potential unemployment. With the policy rate at 3.5–3.75%, the Fed has limited room to maneuver. Recent quarter-point cuts aimed to prevent sharp labor market disruptions, but now the consensus leans toward pausing. For Fed Chair Jerome Powell, this is a challenging environment.

CME FedWatch data reinforces this view. Last week, the probability of a rate hold stood at 95%, now it’s over 97%. Powell’s recent remarks underline the difficulty of balancing inflation and unemployment risks simultaneously.

Crypto Markets Feel the Pressure

Uncertainty over interest rates continues to weigh on crypto assets. The total market capitalization has approached $2.99 trillion, but this modest rise offers little confidence. Bitcoin and major altcoins are trying to hold their ground, yet the market remains fragile.

Sharp gains in gold and silver signal that risk appetite is shifting toward safe havens. This trend tempers investor enthusiasm in Bitcoin and weakens crypto’s short-term narrative.

Polymarket data shows almost a 99% probability that the Fed will hold rates. This expectation favors directionless, jittery movements rather than sudden crypto rallies. Upward attempts exist, but their sustainability is limited.

What Derivatives Markets Indicate

Derivatives indicators suggest investors are not convinced about further upside. Demand for leveraged long positions is weak, while professional traders price higher probabilities of downside risks in options markets.

Bitcoin options’ delta skew reached 12% on Monday. Normally, this indicator fluctuates between -6% and +6%. This level shows put options are trading at a premium, reflecting strong hedging demand. The last time delta skew reached similar levels was December 1, 2025, when Bitcoin dropped from $91,500 to $83,900 in hours. This market memory helps explain today’s cautious stance.

Gold at Record, Bitcoin Behind

Concerns about a weaker U.S. dollar have boosted gold prices to record levels, with spot gold briefly hitting $5,100. Analysts are questioning whether “value-loss trades” are accelerating.

Bitcoin, however, has yet to follow this trend. Even as the S&P 500 rose 0.6% in a single day, Bitcoin remained subdued. This suggests the decline cannot be solely linked to U.S. financial risks. Broader confidence issues dominate the crypto market.

In summary, the Fed’s upcoming decision could increase short-term volatility. If rates remain on hold, the crypto market is likely to continue grappling with uncertainty rather than clear direction.

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Why it matters?

The growing gap between gold and Bitcoin highlights a shift in investor behavior during periods of macro uncertainty. Similar divergences in the past have often preceded changes in risk appetite across global markets.

Gold Strength Supported by Rates, ETFs, and Central Banks

Gold’s rally has been underpinned by several macro factors. The US dollar slipped to a two-month low during the Asian session, providing additional support for bullion. Markets are currently pricing in a 76% probability of another Federal Reserve rate cut in January, further boosting the appeal of non-yielding assets.

According to the World Gold Council, holdings in gold-backed ETFs have increased in every month of the year except May. Central bank purchases and ongoing geopolitical risks continue to reinforce demand. As interest rates fall, the opportunity cost of holding gold declines, keeping investor interest elevated.

Bitcoin Under Pressure After Liquidations

Bitcoin remains under selling pressure following an hour-long liquidation event that wiped out nearly $200 million in long positions on Monday. The asset is still trading roughly 30% below its October peak of $126,210, reflecting weaker short-term sentiment.

While gold tends to benefit from uncertainty, Bitcoin often trades more like a risk asset. During periods of heightened caution, capital flows typically favor stability over volatility, limiting upside momentum for cryptocurrencies.

Technical Signals Draw Market Attention

The divergence between gold and Bitcoin has not gone unnoticed by analysts. Bitcoin’s Relative Strength Index against gold has fallen below 30, a level reached only a handful of times historically. Analysts note that previous occurrences often aligned with market bottoms, though outcomes have varied depending on macro conditions.

The BTC/Gold pair is also testing a long-term ascending support line that has held since 2019. The current Z-Score sits near -1.76, placing the ratio in oversold territory. Still, analysts caution that technical patterns alone are not enough to predict a reversal, especially with inflation remaining above target levels globally.

Liquidity Levels Shape Short-Term Outlook

Bitcoin’s liquidation map highlights key price zones that could influence near-term volatility.

• Approximately $740 million in liquidity sits above the market near the $92,113 level.
• Around $175 million in liquidity is positioned below price near $87,112.

This imbalance suggests that upside moves could trigger larger liquidation cascades. However, sustained momentum will likely depend on spot market demand rather than derivatives activity alone.

On-Chain Data Shows Mixed Signals

On-chain indicators reveal continued spot selling on Binance and Coinbase over recent days. While Coinbase briefly showed signs of net buying, traders are watching closely to see whether daily closes confirm a shift in behavior. Binance, meanwhile, has recorded spot selling for eleven consecutive days.

ETF-driven inflows previously supported Bitcoin’s price action. However, data suggests that some of these coins have been redistributed via Binance, making renewed spot demand on the exchange a key factor for price stability.

Macro Data Could Influence Market Direction

Markets are now focused on upcoming US labor data following a six-week government shutdown. Economists expect a modest 50,000 increase in payrolls and an unemployment rate of 4.5%, pointing to a cooling but resilient labor market.

Morgan Stanley strategist Michael Wilson notes that even moderate weakness in the data could strengthen the case for further rate cuts. Although the Fed recently reduced rates by 25 basis points and signaled a potential pause, officials have emphasized that current inflation levels do not reflect deeper structural pressure.

For now, gold continues to benefit from caution and uncertainty. Bitcoin, meanwhile, remains sensitive to shifts in risk appetite. Whether the gap between the two assets narrows will depend on how quickly investor confidence returns to higher-risk markets

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Mark Connors emphasizes that Bitcoin is still “too young” in terms of institutional trust. Gold, on the other hand, benefits from centuries of established infrastructure and commercial use, making it a safe haven for investors. According to Connors, Bitcoin’s recent decline is linked not to market sentiment, but to global liquidity constraints. In particular, delays in U.S. Treasury spending have reduced liquidity, making riskier assets more sensitive. Are you wondering whether gold or Bitcoin outperformed this year? Keep reading to find out.

Institutional Investors Favor Gold

Following the launch of spot Bitcoin ETFs, many analysts expected a rapid and sustainable rise in Bitcoin. However, after nearly two years, the picture has changed: gold quietly outperformed Bitcoin. Connors explains the main reason as infrastructure and historical trust. Gold, already held in central bank accounts and widely used in trade, remains familiar and reliable for investors.

“Major buyers are still opting for gold. Bitcoin is not yet fully accessible to these institutions,” Connors notes. BRICS nations are also accelerating their gold accumulation, and in some cases, even conducting oil trades using gold. Bitcoin’s limited adoption in international payments means gold continues to dominate as a reserve and trade asset.

Bitcoin’s Decline Linked to Liquidity

Since its July peak, Bitcoin has lost more than 30%, while gold steadily rose, surpassing $4,100 per ounce. Connors attributes Bitcoin’s decline not to sentiment but to liquidity constraints caused by U.S. fiscal policies.

“When the U.S. Treasury slows spending, there is less money in the system. Bitcoin, especially with leverage in Asia, is highly sensitive to these liquidity shifts,” Connors explains. Temporary balance sheet changes and spending delays have hit riskier assets like Bitcoin harder than traditional markets.

The Future of Bitcoin: Can It Replace Gold?

Connors believes gold’s superiority over Bitcoin could persist in the long term, though he notes that this underperformance may not be permanent. If U.S. Treasury spending resumes at scale, liquidity could return to markets, benefiting Bitcoin. He also expects Bitcoin’s appeal to increase as trust in fiat currencies weakens, especially in emerging markets.

Still, institutional investors do not flip a coin between gold and Bitcoin. “Gold fits their objectives; Bitcoin hasn’t yet,” Connors says. This divergence indicates that the journey toward Bitcoin becoming a global reserve asset is slower than many anticipated. The issue isn’t technology—it’s the time needed to build trust and habits.

Ultimately, in 2025, gold demonstrates strong performance against Bitcoin due to liquidity, trade, and institutional trust factors. While Bitcoin continues to grow, gold remains a crucial safe-haven asset for investors.

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The post Why Gold Surged While Bitcoin Lagged: Expert Analysis appeared first on Coin Engineer.