The past few weeks have been very good for those who own gold and bitcoin. Their value has reached record levels as investors continue to support them.
Gold crossed the $4,000 barrier for an ounce this week - this is a unit of weight for precious metals, equal to 31.1 grams. At the same time, on October 5, the world's oldest and most famous cryptocurrency - bitcoin - reached a record, exceeding $125,000 for the first time before recording a slight decline.
So far, 2025 has been extremely successful for gold and bitcoin. Gold is marking its biggest increase since the 1970s, with its price jumping by over 50% since January 1. Bitcoin has seen some dips, but overall its value has risen by about a third since the start of the year.
Why is this happening?
Gold has long been seen by investors as a "safe haven" during times of uncertainty, and has been rising sharply since late 2018, with its value increasing by more than 300% since then.
A factor in the current rally is uncertainty. For example, tariffs imposed by US President Donald Trump in April have fueled concerns about the global economy, the sustainability of US government debt levels, and the future viability of the US dollar as a global reserve currency.
There is also ongoing geopolitical uncertainty resulting from the war in Ukraine and the war in Gaza. Another recent factor is the US government shutdown. "This means that a cloud of uncertainty still hangs over the U.S. economy," said Tim Water, chief market analyst at KCM Trade.
However, experts say that there is more to the current surge in gold prices than just doubts about the future of the U.S. economy or even the global economy. Several analysts point to a surge in demand for gold-backed exchange-traded funds (ETFs), as more investors seek investment opportunities.
"The fact that ETF demand has rebounded so strongly means that there are two forms of "aggressive" gold bidding - from central banks and from ETF investors," Deutsche Bank analysts wrote in a note to clients. Gold has long been bought by central banks around the world, but the new demand for ETFs has fueled the current rally. The latest data from the US Commodity Futures Trading Commission (CFTC) shows that hedge funds hold a record $73 billion worth of gold.
What about Bitcoin?
Bitcoin’s record rise this year is largely due to the re-election of Donald Trump as US president, with his clear and often expressed support for cryptocurrencies contributing to increased demand and confidence in the sector.
And more and more institutional investors are turning to Bitcoin, similar to the trend seen with gold. The cryptocurrency is becoming increasingly preferred as an alternative to other investments, such as the US dollar. Expected interest rate cuts also seem to attract investors to take greater risks with this asset.
Bitcoin is also strengthening against the backdrop of uncertainty surrounding the US economy, with the ongoing government shutdown leading to increased demand. "Bitcoin has traded on "US government risk" this year, best seen in its correlation with US Treasury bond premiums," said Jeffrey Kendrick, head of digital asset research at Standard Chartered Bank, referring to the metric that measures the additional yield investors require to hold long-term government bonds - which reflects their level of confidence in long-term economic stability.
Another factor in Bitcoin's current high value may be related to its annual cycle. October has historically been one of the strongest months for the cryptocurrency, with the price falling only twice in the tenth month of the year since 2013.
Can this continue?
Many observers believe that gold and Bitcoin will continue to rise in price, with further significant breakthroughs expected.
"I predict that Bitcoin will continue to rise during the government shutdown and will soon reach $135,000," predicts Jeffrey Kendrick. The fact that the Trump administration is likely to continue to pursue a favorable policy towards cryptocurrencies adds to the optimism.
As for gold, few believe it will lose value anytime soon. "Growth could continue into 2026, supported by official sector purchases. Institutional demand for gold as a means of diversification could remain robust," HSBC said in a note to investors last week. The London-based bank said it expects central banks to continue buying gold in large quantities as a permanent hedge against geopolitical risk.
This coincides with the World Gold Council's statement in its latest quarterly report at the end of July that its annual survey of central banks showed that "95% of reserve managers believe that global central bank gold reserves will increase over the next 12 months". This, along with growing demand for ETFs from hedge funds and other institutional investors, suggests that the commodity is likely to continue to rise in price.
Author: Arthur Sullivan