Gold price, $2.5 trillion evaporates in one day…larger decline than Bitcoin

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Summary

Gold lost $2.5 trillion in market capitalization in one day, marking the largest drop since 2013.
This gold price decline exceeds the entire market capitalization of Bitcoin, showing that even safe assets are not immune to extreme volatility.
Inflows into spot gold ETFs weakened, but Bitcoin ETFs recorded net inflows, showing a contrasting trend.

Gold, long called a 'safe-haven' asset, lost $2.5 trillion in market capitalization in one day, marking the worst plunge in recent years. This decline exceeds the total market capitalization of Bitcoin (about $2.2 trillion).

On the 22nd (local time), according to CoinDesk, financial analysis outlet the Kobeissi Letter reported that gold prices plunged for a second straight day, recording the largest drop since 2013. Gold fell more than 8%, shocking investors who had flocked to it as an inflation hedge and safe asset.

Swiss resource investor Alexander Stahel said, "An adjustment of this magnitude is statistically a once-in-240,000 trading days event," adding, "the gold market is giving us a statistical lesson." He analyzed, "The recent gold rally was an overheating caused by FOMO, and the sell-off occurred as profit-taking and weak stop-loss selling followed."

Veteran trader Peter Brandt pointed out, "This size of gold price decline corresponds to 55% of the total global cryptocurrency market capitalization," and "it shows that even assets called safe-havens are not free from sharp volatility."

Bitcoin (BTC) fell 5.2% from an intraday high of $114,000 on the same day, and the daily decline at the time of writing was about 0.8%. However, experts analyzed that unlike gold, Bitcoin is an asset where double-digit daily moves are common, making the nature of this correction different.

Along with the plunge in the gold market, cryptocurrency investor sentiment contracted. The cryptocurrency Fear & Greed Index fell into the 'Extreme Fear' zone, its lowest level since December 2022.

Marion Laboure, Deutsche Bank macro strategist, also said in a recent report, "Both gold and Bitcoin share scarcity and a store-of-value function," adding, "gold's volatility shows that Bitcoin has room to emerge as a store of value."

Meanwhile, inflows into spot gold ETFs weakened, but Bitcoin ETFs recorded net inflows of $142 million in a single day, showing a contrasting trend.