Bitcoin has surged this year, topping $124,000 per bitcoin in August as a growing crisis at the Federal Reserve takes a surprising turn.
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The bitcoin price has doubled since this time last year—with some now predicting bitcoin is on the brink of a $84 trillion shock—with the massive $4 trillion rally causing some of the world’s biggest celebrities to jump on the crypto bandwagon.
Now, as the new crypto gold rush forges what could be the new “Rockefellers or Rothschilds,” Goldman Sachs analysts have warned the U.S. dollar’s global reserve-currency status could be eaten away by gold—just as bitcoin comes for its safe-haven asset crown.
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Goldman Sachs analysts have warned a Federal Reserve crisis could erode the U.S. dollar’s global reserve asset position, boosting gold as bitcoin mounts a serious challenge.
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“A scenario where Fed independence is damaged would likely lead to higher inflation, lower stock and long-dated bond prices, and an erosion of the dollar’s reserve-currency status,” Goldman analysts including Samantha Dart wrote in a note to clients seen by Bloomberg. “In contrast, gold is a store of value that doesn’t rely on institutional trust.”
Trump has been ramping up his war of words against the Federal Reserve this year, attacking Fed chair Jerome Powell as economists warn of a looming dollar disaster.
Trump has threatened to fire Powell and tried to remove Fed governor Lisa Cook, sparking fears over the future of the Fed’s independence from the White House.
Dart predicted the gold price could surge to $5,000 an ounce if U.S. president Donald Trump’s war on the Fed causes global investors to lose confidence in bonds, stocks, and the dollar, with only a small shift from the massive Treasuries market into bullion enough to trigger outsized gains.
“As a result, gold remains our highest-conviction long recommendation in the commodities space,” Dart wrote, adding, “we estimate that if 1% of the privately owned U.S. Treasury market were to flow into gold, the gold price would rise to nearly $5,000/[troy ounce], assuming everything else constant.”
Gold’s rally this year, climbing from $2,500 an ounce 12 months ago to $3,600 today, has come alongside a bitcoin price boom that’s sent bitcoin, sometimes called digital gold, to record highs.
“[Bitcoin] sits at the intersection of gold and equities—an emerging store of value that thrives when liquidity rotates into risk,” Matt Mena, crypto research strategist at 21Shares, said in emailed comments following the latest U.S. jobs report coming in below expectations, setting up the Federal Reserve to cut rates later this month as U.S. president Donald Trump has called for.
“With $7.2 trillion in money market funds likely to move as yields fall, bitcoin offers the ultimate hybrid profile: digital gold for safety, and asymmetric upside as a risk-on asset. Seasonality also strengthens the setup, with the fourth quarter historically bitcoin’s strongest quarter—the asset has only seen two negative Octobers in its entire history— suggesting that as liquidity returns, buying pressure could accelerate into year-end.”
Technical analysis comparing bitcoin to gold by Coindesk shows the bitcoin price could be headed for “a potential breakout by late in the fourth quarter or early next year.”
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Bitcoin has surged in recent years, pushing the bitcoin price to an all-time high of $124,000 per bitcoin in August as it climbs alongside the price of gold.
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Meanwhile, the World Gold Council is developing a digitalized form of gold as fears grow that bitcoin could replace it as the world’s safe-haven asset.
“We are trying to standardise that digital layer of gold, such that the various financial products used in other markets can be used in the gold market going forward,” David Tait, a former banker and chief executive of the World Gold Council, an industry body representing gold miners, told the Financial Times.
“My goal is that many asset managers around the world will suddenly look at it differently.”
Fears that bitcoin could overtake gold among investors seeking exposure to a scarce, non-governmental or corporate asset have been heightened by the rapid rise of bitcoin exchange-traded funds (ETFs), which now hold almost as much in assets under management (AUM) as gold ETFs despite spot bitcoin ETFs only being launched at the beginning of 2024.
“How long before AUM in ‘digital gold’ ETFs surpasses physical? Bitcoin ETF assets are closing in on gold ETF assets,” financial markets research company Bespoke’s account posted to X, pointing to data that showed they are now worth $150 billion and $180 billion, respectively.