Bitcoin Languishes 30% Below Peak as Gold Breaks $5,000, Highlighting Crypto's Risk-On Reality

Bitcoin's positioning as "digital gold" faced a harsh reality check Monday as the precious metal surged past $5,000 per ounce for the first time while the cryptocurrency traded more than 30% below its all-time high, underscoring the divergence between traditional and digital safe havens.

Bitcoin fell 1.87% over 24 hours to $87,155, extending its retreat from October 2025 record levels. Ethereum dropped 3.4% to $2,843, down 11.4% over the past week, while Solana declined 3.95% to $121.35. Total cryptocurrency market capitalization stood at $2.95 trillion, down 1.74% in 24 hours, per Coinmarketcap data.

The crypto Fear and Greed Index plunged to 20, indicating "extreme fear," down from 61 in mid-January as investor sentiment soured.

Gold's trajectory moved in the opposite direction. Spot prices climbed 0.95% to $5,098 per ounce during Asian trading, capping a 64% surge in 2025 and adding over 16% year-to-date. Silver held above $100 per ounce at $104.72, following a 147% rally last year.

The precious metals rally reflects capital flowing toward traditional safe havens amid geopolitical volatility and monetary uncertainty.

The divergence dismantles the narrative that bitcoin functions as a digital store of value during market stress. Since institutional investors entered the crypto market through spot ETFs and other products, bitcoin has increasingly behaved as a high-beta risk asset, correlating with tech stocks rather than defensive instruments.

Gold's surge has been driven by U.S. monetary easing, central bank purchases and record ETF inflows as investors seek shelter from geopolitical tensions including U.S.-NATO disputes over Greenland and ongoing Ukraine-Russia negotiations.

A weaker dollar provided additional support for gold last week, with the Bloomberg Dollar Spot Index falling 1.6% in its biggest weekly drop since May. Bloomberg characterized the move as a "debasement trade" as investors retreat from currencies and Treasuries.

The week ahead

Bitcoin faces headwinds from multiple directions this week. The Federal Reserve's policy meeting Wednesday is expected to leave rates unchanged, with economists forecasting no cuts until June. Higher interest rates typically weigh on non-yielding assets like cryptocurrency.

Meanwhile, regulatory clarity remains elusive. The SEC and CFTC will hold a joint crypto event Tuesday, while the Senate Agriculture Committee is scheduled to mark up cryptocurrency market structure legislation Monday. Senator Kirsten Gillibrand told CNBC she's "very optimistic" the bill will advance, though Democrats haven't reached consensus. The Senate Banking Committee postponed markup of its own digital asset bill earlier this month following crypto industry opposition.

Analysts forecast gold could reach $5,500 later this year, with some seeing potential for $6,400. For Bitcoin, the path forward depends less on safe-haven demand than on risk appetite returning to markets and regulatory certainty emerging in major jurisdictions.