Crypto Plunge A Warning For Gold Investors? Here's Why The Two Asset Classes Differ

Cryptocurrency bitcoin is on a steep decline in trade this year amid its speculative nature and a broader bearish sentiment among all digital tokens. Prices of the world's largest and most popular cryptocurrency, have slumped nearly 25% in Nov, falling to a low near $80,500 last week.

Bitcoin's free-fall has shifted investor's attention to other asset classes such as gold, which has hit back-to-back record highs on a safe-haven appeal amid geopolitical headwinds. Analysts believe that the yellow metal is different from almost every other asset as it is used in several ways. When financial markets are under stress, investors buy gold as a haven.

Cryptocurrencies have so far behaved like speculative investments. The crypto market is still in development. It is highly volatile and can be hard to buy and sell. However, gold has repeatedly proven itself as a safe-haven investment, including during times of high inflation. Hence, cryptos are no substitute for gold.

Gold has delivered returns rivaling the stock market over the past 20 years and more. The metal is easy to buy and sell, even during periods of extreme stress. Investments in gold help diversify portfolios, by outperforming other assets during economic and financial downturns.

Hemen Bhatia – Executive Director & CEO, Angel One Asset Management Company said, “In a phase of market uncertainty, the steady flows into gold ETFs reflect how investors are viewing gold as a true safe haven an effective hedge against volatility. In October alone, gold ETFs in India attracted Rs 7,743 crore of new inflows. This underscores how the gold-ETF route is increasingly preferred as a transparent, regulated channel to gain exposure to gold unlike many other formats that may lack oversight."

Notably, bitcoin assumes significance among all digital tokens it has the largest market capitalization of all cryptocurrencies. The demand however, for crypto asset is largely limited to investment. On the other hand, gold is bought for many reasons. Individual investors and global central banks own the yellow metal to generate returns and protect their wealth.

Gold is mined across the world and no continent accounts for more than 30% of global production. Jewelry is a major part of gold demand. It is also a key component of electronic devices, from cell phones to TV sets. Almost 50% of the global stock of gold is in jewellery, while over 20% is owned by investors as gold bars and gold coins, according to news agency Reuters.

Cryptos can experience big price swings. Bitcoin, for example, has soared and tumbled in value over the past year, as speculators have piled in or sold out. On the other hand, gold has surged by over 50% in 2025, making it a standout asset for the year. The precious metal has significantly outperformed other assets, including the benchmark Nifty 50 index.

Gold is a tried and tested investment asset. It tends to come into its own when equity markets are under stress. Bitcoin, however, does not follow this pattern. As cryptocurrency is much more volatile than gold, investors who own cryptos would benefit from adding gold to their portfolios, to reduce overall risks and increase long-term underlying returns.

"As investors seek protection from volatility, the appeal of gold itself remains undimmed, and gold ETFs offer the combination of the metal’s timeless safe-haven appeal with the discipline and structure of regulated investment vehicle," said Bhatia of Angel One Asset Management.

According to data on CoinGecko, the crypto token has now rebounded to $86,500. The cryptocurrency, however, is down roughly a third from its October peak as the global risk appetite wanes. The slide follows a stellar run this year that propelled it to a record high above $120,000 in October, buoyed by favourable regulatory changes towards crypto assets globally.

Bitcoin has erased all its year-to-date gains and is now down 12% for the year, while ether has lost close to 19%. About $1.2 trillion has been wiped off the market value of all cryptocurrencies in the past six weeks, according to market tracker's CoinGecko data.

Gold prices held steady on Monday, as growing expectations of a Federal Reserve rate cut next month helped offset pressure from a firm US dollar. Spot gold was last up 0.1% at $4,069.10 per ounce. US gold futures for December delivery last fell 0.3% to $4,065.40 per ounce.

"Gold opened weak, falling by Rs 900 to Rs 1,22,750, as a stronger rupee and softness in Comex gold near $4,045 pressured domestic prices. With volatility high, the market now looks to US economic data releases," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

Back home, gold futures, due for a Dec. 5 expiry, traded 0.38% lower at Rs 1,23,725 per 10 grams on the multi commodity exchange (MCX). Last week, gold closed with a 0.5% decline. "It was weighed down by a firm US dollar holding above 100 amid uneven labor data, the absence of October payrolls, and mixed Fed commentary," said Kaynat Chainwala, Analyst Commodities & Currency, Kotak Securities.

Bullion has been choppy over the past three sessions, reflecting traders’ indecision, but with rate-cut bets rising and geopolitical risks lingering, dips in gold are likely to attract renewed buying interest in the coming week with next resistance seen around 1,25,000 and support near 1,22,000.

"However, hopes of a Federal Reserve rate cut in December are limiting the downside for bullion. Gold is expected to remain volatile within a range of $4,025–$4,085 on Comex and Rs 1,21,500–Rs 1,25,000 on MCX," said Trivedi of LKP Securities.

Gold, a non-yielding asset, tends to do well in the low-interest-rate environments. Analysts noted that gold is struggling to gain traction on Fed cut likely being pushed, China demand concerns, and easing trade risks.

"Looking ahead, as structural trends like currency pressure, inflation risks and global instability persist, gold ETFs are likely to become an important component of many portfolios as part of overall portfolio diversification," said Hemen Bhatia of Angel One Asset Management Company.