How a Sell-Off in Gold Could Propel Bitcoin to $200,000

After rallying to an all-time high (ATH) of $4,378 earlier this month, Gold has now reversed to $4,027, representing an 8% drop. The downtrend began after the Donald Trump administration hinted at working with the Chinese government to reach a trade agreement.

In this article, we will discuss how Gold’s current bearish trend could benefit Bitcoin and possibly fuel a rally to $200,000.

What Caused Gold to Rally?

Over the years, investors have considered Gold as a safe haven asset. Therefore, during uncertainty, the commodity experiences massive demand as investors move away from fiat currencies, which risk devaluation. The recent catalyst for Gold’s rally was Trump’s announcement of a 100% tariff on imports from China on October 10.

However, since US Treasury Secretary Scott Bessent revealed that they were negotiating a trade deal with China, demand for Gold has declined; hence the downtrend.

The Gold-Bitcoin Inverse Relationship

Bitcoin and Gold have always had an inverse relationship. For instance, when Gold reached an ATH nearly two weeks ago, Bitcoin dropped to $103,000 for the first time since July. Now, BTC is rising as Gold creates lower lows.

Additionally, demand for Bitcoin exchange-traded funds (ETFs) is increasing while Gold ETFs are processing massive outflows. Crypto media house CoinTelegraph reported on Tuesday that Gold ETFs have lost $2.8 billion to outflows since October 20, while Bitcoin ETFs have processed net inflows worth $3.5 billion within the same timeframe.

Will Renewed Interest in Bitcoin Fuel a Jump to $200k?

According to analysts, investors are moving funds from Gold to BTC as risk appetite rises. Their claims are supported by previous market cycles, where Gold cooled down as Bitcoin began to rally. For example, in the 2020-2021 cycle, Gold recorded a new ATH of $2,000 amid the COVID-19 pandemic. As investors adjusted to the new reality, the asset trended downward while Bitcoin’s price began to rise and later reached an ATH of $69,000.

That said, several analysts anticipate that history will repeat itself. Moreover, they argue that the adoption of Bitcoin by top companies, coupled with reduced interest rates, could help BTC touch $200,000.

As of October 29, Numerous firms have established Bitcoin treasuries, adding buying pressure on the asset. Tech company Strategy is the biggest institutional BTC holder after purchasing over 640,000 coins. Other notable holders include Celsius and Marathon Digital Holdings, which own 43,514 and 53,250 BTC, respectively.

Regarding monetary policy, the Federal Reserve is expected to take a dovish approach this quarter by lowering rates for the second time in 2025. Such a move could encourage investors to abandon fiat and Gold to focus on risky assets like Bitcoin, enhancing the prospects of a rally to $200,000.

What Could Block a Move to $200k?

While Bitcoiners are positive that a journey to $200,000 is achievable, there are multiple obstacles on the way, including:

1. Price Volatility: BTC is extremely volatile, meaning it can experience sharp price rallies or declines within minutes. Therefore, even if institutions fuel a rally, large BTC holders or whales could cause a sudden price drop when they decide to sell, making it difficult for the $200,000 mark to be attained.

2. Regulatory uncertainties: The crypto industry remains largely unregulated, thus preventing institutional participation in some countries. For instance, China, the world’s second-largest economy, has yet to provide guidelines for companies looking to step into crypto, limiting institutional demand that could push Bitcoin to $200,000.

3. Possible Comeback for Gold: It is impossible to rule out another Gold rally, considering that the US and China have not signed a trade deal, and there is still no agreement to end the Russia-Ukraine war. So, if solutions to these key issues are not found, Bitcoin will become unattractive to investors who are likely to flee to Gold, the safe-haven asset.

4. Competition: Bitcoin might encounter stiff competition from equities, which have performed well this year. If funds flow out of the coin, a rally to $200,000 could be challenging to achieve.

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