Gold, one of the oldest and most trusted stores of value, suffered a brutal sell-off in just 24 hours, wiping trillions of dollars off its market value, more than the entire value of Bitcoin.
The gold market continued the massive correction it witnessed on Tuesday, with $2.5 trillion wiped off its market value on Wednesday, According to To the Financial Analysis Publication, Al Qubaisi’s letter.
Putting gold on track for its biggest two-day decline since 2013, the 8% drop sparked panic among investors who turned to the metal as a hedge against inflation and market volatility after it surged 60% earlier in 2022.
Although Bitcoin (BTC) – often called “digital gold” due to its maximum supply – is known for its sharpest daily corrections with double-digit percent declines, gold’s recent collapse underscores that even “safe-haven” assets are not immune to sharp sell-offs.
Gold falling 7% is rare: that’s why it collapses
The size of the correction is highly unusual and in theory would only happen “once every 240,000 trading days,” said Alexander Stahl, a resource investor in Switzerland. Notice In a post on X on Tuesday.
“Gold gives us a lesson in statistics,” he said, adding that the asset has faced larger drawdowns since 1971, with such corrections counted 21 times.
Addressing the reasons behind the decline, Stahill pointed to the growing fear of missing out (FOMO), with the ‘gold craze’ gaining momentum as investors increasingly seek exposure to gold stocks, physical gold bullion and token gold.
“FOMO caused the recent rally. Now, profit-taking and weak hands have been disrupted,” Stahill said, adding that statistically there were chances that “quieter days are coming.”
The Cryptocurrency Fear and Greed Index is at its lowest levels since 2022
Since gold’s $2.5 trillion decline exceeds Bitcoin’s entire market cap of $2.2 trillion, some commentators have highlighted the size of the correction compared to the cryptocurrency market.
“In terms of market cap, this drop in gold today is equal to 55% of the value of every cryptocurrency in existence,” veteran trader Peter Brandt said. books In X’s post on Tuesday.
Bitcoin, which has long been criticized for its volatility as one of the main arguments against it being a legitimate store of value, has also come under fire. slid It is down 5.2% from its intraday high of $114,000, though daily losses were around 0.8% at the time of writing, according to Coinbase data.
While Bitcoin exchange-traded funds (ETFs) also exist opinion $142M inflows yesterday, broader cryptocurrency market momentum drops to ‘extreme fear’, with Cryptocurrency Fear and Greed Index drop To levels not seen since December 2022.
Related to: The correlation between Bitcoin and gold is increasing as BTC follows the path of gold to store value
Gold’s continued volatility came weeks after Marion Laborie, a macro strategist at Deutsche Bank, noted a range of similarities between gold and Bitcoin, which could make the cryptocurrency assets an attractive store of value.
Deutsche Bank analysts also confirmed that despite breaking new record highs in dollar terms, gold only crossed its all-time revised real highs in early October.
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