Bitcoin's correlation with gold decreases: Is the "digital gold" narrative taking a turn?

Bitcoin is experiencing a “slow-motion crash”: since reaching a record high of $125,000 in October 2025, it has continued to decline, even briefly falling below the $60,000 mark. Gate Ventures’ latest weekly report shows that just last week, BTC prices dropped 8.6%, with ETF fund outflows totaling as much as $689 million. The market sentiment index is in the extreme fear zone.

Meanwhile, gold made a strong comeback in 2026, with prices not only breaking through the $5,000 per ounce psychological barrier but also repeatedly battling near this critical level, demonstrating strong safe-haven appeal.

Market Divergence

Recent market movements show a thought-provoking divergence. Gold prices successfully reclaimed the key psychological level of $5,000 per ounce, demonstrating resilience. During Asian morning trading, spot gold prices rose 0.4% to $5,042.82 per ounce.

Investors are increasingly viewing gold as an alternative hedge against “dollar asset confidence volatility.”

In contrast, Bitcoin market sentiment has plunged into extreme pessimism. According to Gate Ventures’ weekly report released on February 9, BTC prices fell 8.6% over the past week, with the fear and greed index at only 14, indicating extreme fear.

Capital outflows are evident, with data showing that the US spot Bitcoin ETF experienced net outflows of approximately $9 billion between November and December 2025, and another $3 billion in January 2026. Meanwhile, retail participation is also cooling.

Roots of Divergence

This divergence in performance stems from two assets facing fundamentally different market environments and internal logic.

Gold’s strength is reinforced by its status as a traditional ultimate safe-haven asset. On a macro level, concerns about the US dollar credit system are the core driving force.

The expansion of US fiscal deficits effectively dilutes the dollar’s purchasing power, weakening its credit foundation. Investor doubts about dollar strength directly boost demand for assets like gold, which are viewed as “non-sovereign currencies.”

Bitcoin, on the other hand, faces a “liquidity crunch.” Market analysts point out that this is not a case of Bitcoin losing to gold but rather responding to a liquidity squeeze caused by the unique structural features of the cryptocurrency market—features that gold has never had to confront.

Crypto exchanges, during crises, sometimes act as single points of failure, employing “socialized losses” (using profits from successful traders to cover overall losses), which damages market participants’ trust in platform governance and credit risk.

Narrative Challenges

This market divergence directly challenges the prevailing “digital gold” narrative of recent years.

Under genuine market stress, Bitcoin and gold exhibit completely opposite characteristics. When markets seek safety, investors flock to gold, while Bitcoin is sold off. Bitcoin’s “value” largely depends on the expectation of widespread adoption in the future, but this very expectation contains inherent contradictions.

Analysts note that on one hand, high volatility attracts speculative capital and supports its high prices; on the other hand, to become a widely adopted currency or store of value, it must maintain relatively low volatility. These two goals are fundamentally at odds.

Interestingly, this decline has completely erased the previous gains driven by pro-cryptocurrency policies following Trump’s election victory. This indicates that price increases driven by a single narrative are often fragile.

Multi-faceted Attributes

Rather than the “digital gold” narrative collapsing, it is more accurate to say that the diversified attributes of crypto assets as an independent asset class are becoming clearer.

Grayscale’s “2026 Digital Asset Outlook” report states that the dominant force in the crypto market is shifting from retail sentiment to institutional capital, compliance channels, and fundamentals. The ways institutions enter (such as through spot ETFs) and their considerations are very different from the short-term speculative narratives favored by retail investors.

The market is increasingly distinguishing Bitcoin from the broader “altcoin” ecosystem. During liquidity crunches, Bitcoin maintains relative credibility due to its deeper market depth and clear use as collateral.

QCP Capital analysts believe that, despite short-term influences from different market forces, the long-term narrative still sees Bitcoin and gold as “quite similar” in their core inflation-hedging properties. While this long-term narrative remains unchanged, their short- and medium-term paths have diverged.

Future Outlook

Looking ahead, the paths of Bitcoin and gold may continue to diverge, each serving different portfolio needs.

For gold, institutional outlooks are generally bullish. Major banks forecast the 2026 gold trading range at $4,000 to $5,300 per ounce. Some even believe gold is in the early stages of a significant bull market.

For Bitcoin, the market is digesting leverage and awaiting new structural drivers. Key points to watch are whether institutional long-term allocation strategies will change.

Grayscale’s report suggests that progress in US crypto market regulation in 2026 could provide clearer compliance pathways for institutions, encouraging “ongoing capital inflows.” This may help Bitcoin gradually shed its overreliance on a single narrative.

Summary

As of February 2026, the market is teaching an important lesson: asset correlations are not fixed; they evolve dynamically with market conditions, investor structures, and the development stages of the assets themselves.

The divergence between Bitcoin and gold is less about the “death” of the “digital gold” myth and more about the market adopting a more mature, nuanced perspective on different assets.

Investors may need to update their mental models: no longer simply viewing Bitcoin as a “digital substitute” for gold, but rather as an independent, high-growth potential asset class that also carries high volatility and unique risks such as liquidity shortages and exchange credit risks.