Gold is on fire. Investor FOMO—fear of missing out—has pushed global demand for the precious metal past $100 billion in the third quarter, a historic peak. At the same time, Bitcoin has managed to stage a remarkable Uptober comeback during the last days of the month.
This rally reflects a major shift among investors who see gold and Bitcoin as safe bets amid economic unrest. In fact, global gold demand rose 5% to 1,313 tonnes, and the price shot up 34% this year alone, reaching a record $2,788 per troy ounce.
Investors—big and small—are diving into gold, while Bitcoin continues its quiet climb toward another all-time high. The twin rises signal a shift as institutions, hedge funds, and family offices hedge against shaky traditional markets and uncertain monetary policies.
Amid this frenzy, the World Gold Council (WGC) cited a surge in demand for gold-backed ETFs, which finally rebounded after nine straight quarters of outflows. Inflows into gold ETFs totaled 94 tonnes, with total investment demand for physical gold—bars, coins, and fund backing—doubling to reach 364 million tonnes this quarter.
Wealthy families and institutional investors are particularly fueling the demand. John Reade, a WGC strategist, says many institutions missed out on gold earlier in the year, but “lots and lots of people are looking to buy gold on a dip.”
Central banks and price shifts
While investors are pouring in, central banks are taking a different approach. Central bank gold purchases dropped sharply by 49% year-on-year to 186 tonnes in late summer, marking the lowest quarterly buying levels in two years.
Why? Simple: prices are high. March kicked off a sharp price increase, and for central banks, it’s a matter of cost-effectiveness. But there’s another angle here too—central banks in the West are eyeing interest rate cuts, which would traditionally support gold’s value as a non-yielding asset.
Lower rates make holding gold cheaper because there’s no yield to miss out on. Gold prices this year also rode the wave of global tensions, particularly the conflicts in the Middle East and Ukraine.
Many central banks are diversifying away from the dollar as Western economies look less stable, and a drop in interest rates supports this shift. Jewelry demand, which forms about 40% of global gold use, hasn’t kept pace with the price rally, falling 7% in Q3.
“The absolute price level is quite mind-boggling to someone who’s been following gold for a long time,” says Reade, noting a clear impact on consumer demand in the jewelry market.
Bitcoin stays in the game, retail interest lags
Bitcoin has been surprisingly calm on the retail front. The apex crypto is closing in on its all-time high, yet retail investors barely flinch. According to crypto analyst Miles Deutscher, “Bitcoin is on the verge of breaking all-time highs, and retail interest is still almost non-existent.”
A look at Google Trends confirms this lull: search interest for “Bitcoin” sits at a mere 23 out of 100 compared to peak levels in May 2021. In previous bull runs, retail investors piled in, skyrocketing apps like Coinbase up the ranks.
This time? Coinbase ranks at 308 in Apple’s App Store, way off from past highs when it broke into the top 50. But recent data shows Coinbase isn’t out of the picture. On October 28 and 29, the app’s ranking jumped 167 positions.
This could mean crypto prices are starting to nudge retail interest, but we’re far from the fever pitch of past rallies. CryptoQuant reports that retail investors were “slowly returning” to Bitcoin, but larger investors—whales, in crypto lingo—have been outpacing them all year.
Bitcoin retail transactions fell to $326 million in daily volume on September 21, the lowest since 2020. Yet, as the analysts point out, sluggish retail activity often “precedes Bitcoin price rallies.” In other words, retail traders tend to show up after the party’s already started, chasing gains as Bitcoin heads north.
Bitcoin battles fiat weakness
While U.S. retail interest may be lukewarm, Bitcoin’s story is different in Europe. After months of consolidation, Bitcoin broke its March ceiling in the BTC/EUR trading pair.
A shift in dollar strength made this possible, and Bitcoin’s price shot up in euros, Australian dollars, Canadian dollars, and even the Turkish lira, as each hit record lows in Bitcoin terms.
The weak euro and other fiat currencies highlight a trend where Bitcoin is seen as a hedge against declining fiat, though it hasn’t fully outpaced gold in this regard.
Charting this trend, veteran trader Peter Brandt shared a BTC versus XAU/USD comparison, commenting on Bitcoin’s challenge in the fight against fiat depreciation.
“This is the heavyweight division in the battle against fiat depreciation,” Brandt noted, as Bitcoin still trades below its March 2024 highs and its double peaks in 2021. With no significant price gains in the past 42 months, Bitcoin has yet to prove it can surpass gold’s stability.
