Bitcoin falling while gold hits new highs: narrative battle in the markets

In recent months, the landscape of alternative assets has shown a fascinating pattern: while precious metals are recording historic gains, bitcoin continues to underperform in relative terms. The contrast is so pronounced that it has sparked intense debate among market analysts about what is really happening with the leading cryptocurrency. The latest data place bitcoin below $88,000, a significant drop considering that just a few months ago, this asset was considered unstoppable.

The rally of metals versus falling Bitcoin

Gold has experienced an extraordinary rise, approaching the $5,000 per ounce mark, with sustained gains demonstrating strong demand for safe assets. Silver has accompanied this movement, rising more than 3% in recent sessions. In contrast, bitcoin has been steadily declining, losing ground not only against these precious metals but against virtually all major assets. According to a comparative performance analysis since November 2024, bitcoin has fallen 2.6%, while silver has appreciated 205%, gold 83%, Nasdaq 24%, and the S&P 500 17.6%.

Two opposing perspectives on why Bitcoin is falling

Jim Bianco, director of Bianco Research, has openly questioned whether the narrative of bitcoin adoption — which for years was the main driver of its price — has lost its momentum. “Adoption announcements are no longer working. A new theme is needed, and that is not yet evident,” the analyst stated on social media. This observation reflects a growing concern: has bitcoin reached a saturation point in its institutional adoption curve?

However, Eric Balchunas, senior ETF analyst at Bloomberg, offers a different perspective. According to Balchunas, bitcoin is not truly falling in long-term absolute terms: it has risen approximately 300% over the past 20 months, from less than $16,000 at the bottom of the 2022 crypto winter to its peak of $126,000 in October 2024. What is happening, according to his analysis, is a “quiet public operation” where early investors who have held their positions for years are taking profits. An emblematic example was an investor who sold over $9 billion in bitcoin in July after holding the asset for more than a decade.

The historical context: bitcoin after the adoption wave

Balchunas’s perspective invites reflection on cryptocurrency market cycles. Bitcoin went from being virtually nonexistent to becoming an institutionally recognized asset. By November 2024, bitcoin had accumulated a 122% year-over-year increase, far surpassing gold. But such explosive returns are not sustainable indefinitely. The Bloomberg analyst reminded that while a “new narrative” is expected to revive prices, other assets are advancing rapidly while bitcoin remains stagnant, falling in relative performance against almost the entire traditional investment portfolio.

Technical indicators: risk concentration

Beyond narrative analysis, blockchain data reveal concerning dynamics. Approximately 63% of the wealth invested in bitcoin has a cost basis above $87,000, meaning a large portion of holders are underwater. An additional metric shows a strong concentration of supply between $85,000 and $90,000, with weak supports below $80,000. This pattern suggests that if bitcoin continues to fall, it could face cascading sales at key levels, amplifying downward pressure.

The battle between these forces — the exhausted adoption narrative versus consolidation after historic gains — will determine bitcoin’s next moves in a market where precious metals remain the clear winners of the cycle.