"It has jumped more than 40% this year"…Where the 'bulk money' moved from Bitcoin

Funds flow into gold…Gold at record highs, Bitcoin plunges

As international gold prices repeatedly hit record highs, global funds moved en masse from cryptocurrencies to gold. Amid clear investor preference for safe-haven assets amid the Trump administration's uncertain tariff policies, expectations that the U.S. central bank (Fed) will cut its benchmark rate again by year-end have supported the rise in gold prices.

○ Demand for safe-haven assets soars 41% this year alone

On the 22nd (local time) at the New York Mercantile Exchange, December-delivery gold futures closed at $3,775.1 per troy ounce, up 1.98% from the previous trading day, marking another record high. Gold futures, which started the year at $2,669 on January 2, have surged 41.4% so far. This increase is larger than the price rises seen around the COVID-19 pandemic or the 2008 financial crisis. On the same day, spot gold also closed at $3,757.18, marking an all-time high.

By contrast, cryptocurrencies showed the opposite trend to gold. According to crypto market aggregator CoinMarketCap, as of 6 a.m. KST on the 23rd, Bitcoin traded at $112,847.55, down 2.23% from 24 hours earlier. At the same time, Ethereum fell 6.6% and Ripple fell 4.51%.

Investors appear to have withdrawn funds, expecting the cryptocurrency market to remain weak for the time being. According to Business Insider, about $1.5 billion worth of long positions were liquidated that day—the largest amount since the end of March. Crypto-specialized media CoinDesk diagnosed that "Bitcoin's price decline and gold's price rise occurred together," saying "profits from Bitcoin sales may have flowed into gold." Crypto-related stocks such as Bitmain (-10.1%), Circle (-4.51%), and Coinbase (-3.07%) also fell sharply that day.

○ Fed rate cuts…Gold's strength continues

Since the start of the Trump administration, ongoing uncertainty over tariff policies has driven investors into the safe-haven asset gold throughout the year. The Wall Street Journal (WSJ) explained, "That gold has reached record highs is due not to a financial crisis but to the White House," saying "from large investors to small investors, everyone rushed to protect themselves from uncertainty in the U.S. economy and the U.S.'s uncertain role on the international stage."

In particular, last week's Fed decision to cut the policy rate made the gold price curve even steeper. Fed officials indicated in their recently released economic projections that the Fed is expected to cut rates two more times this year. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the rate futures market reflects a 75% probability that the Fed will lower the benchmark rate by 0.5 percentage points at the December Federal Open Market Committee (FOMC) meeting.

That day, Steven Mnuchin, known as Trump's 'economic adviser', argued in a speech to the New York Economic Club that there is a need to cut the policy rate aggressively. He said, "Changes in tax and immigration policies, rent relief, regulatory easing, and increased tax revenue from tariffs are creating a new economic environment that could allow the Fed to lower the benchmark rate by about 2 percentage points from its current level."

Experts expect gold's bullish trend to continue for the next few months. Citigroup set a three-month gold target of $3,800. Jim Wyckoff, senior analyst at Kitco Metals, told Reuters, "With geopolitical tensions, such as the Russia-Ukraine war, unresolved, demand for safe-haven assets continues to flow in," adding "the Fed's rate cuts and prospects for further cuts are also supporting prices."

Silver also rose alongside gold. On the day, spot silver closed at $43.99 per troy ounce, up 2.1%, marking a 14-year high. Han Tan, senior market analyst at Nemo.money, analyzed, "The current gold-silver ratio (the price of gold divided by the price of silver) is 86, still above the five-year average of 82, indicating room for further gains." This suggests that, relatively speaking, silver is cheaper than gold and could catch up to gold prices.

Reporter Han Gyeong-je