The Bitcoin-to-Gold Ratio: A 50% Drop in 2025

The Bitcoin-to-Gold Ratio: A 50% Drop in 2025 - Here’s What Happened

The Bitcoin-to-gold ratio has dropped dramatically, indicating a significant shift in the dynamics between these two assets. From a ratio of 40 ounces of gold needed to buy one Bitcoin (BTC) in December 2024, it has reduced to just 20 ounces by the fourth quarter of 2025. This shift reflects not a decline in Bitcoin's value, but a substantial increase in gold's appeal as a store of value.

Key Takeaways

The BTC–gold ratio decreased from 40 to 20 ounces per BTC from December 2024 to Q4 2025.
Gold saw considerable inflows, with central banks acquiring 254 tonnes and global gold ETFs increasing their holdings by 397 tonnes in the first half of 2025.
Demand for Bitcoin softened in the second half of the year, as the assets under management (AUM) in spot ETFs fell from $152 billion to $112 billion, alongside long-term holders selling over 500,000 BTC.

The Bitcoin-to-gold ratio fell 50% in 2025: Here’s why

Understanding Gold's Role in the Market

Why Gold Became the Preferred Store of Value in 2025

In 2025, gold emerged as the leading asset for storing value, achieving a remarkable year-to-date (YTD) increase of 63% to surpass $4,000 per ounce by the fourth quarter. Notably, this surge occurred despite challenging monetary conditions. Throughout most of the year, U.S. interest rates were high, with the Federal Reserve only cutting rates for the first time in September. In typical scenarios, higher rates can hinder the performance of non-yielding assets like gold, but 2025 saw a unique shift in demand patterns.

Central Banks’ gold accumulation in 2025. Source: World Gold Council

Central banks played a pivotal role in this gold rally, purchasing a total of 254 tonnes of gold up to October. The National Bank of Poland led these purchases, adding 83 tonnes to their reserves. Concurrently, gold exchange-traded funds (ETFs) expanded their holdings by 397 tonnes in the first half of 2025, reaching a record total of 3,932 tonnes by November. This change marks a significant turnaround from the outflows seen in 2023. Interestingly, even with real yields averaging 1.8% in developed markets during Q2, gold still rallied 23%, indicating a decoupling from its usual inverse correlation with yields.

Gold ETF flows and gold price. Source: World Gold Council

The increase in uncertainty also made gold a more attractive option. The Volatility Index (VIX) rose to an average of 18.2 for 2025, up from 14.3 in 2024. Meanwhile, geopolitical risk indicators surged by 34% over the same period. Gold’s correlation with equities diminished significantly, which further confirmed its role as a hedge against risk and a long-term investment.

Thus, in an environment of tight U.S. financial conditions and delayed monetary easing, gold became less of an inflation hedge and more of a comprehensive insurance option for investors.

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A Look at Bitcoin’s Performance

Why Bitcoin Fell Behind Gold in 2025

While Bitcoin enjoyed impressive returns in 2025, exceeding six figures and benefitting from the demand for spot Bitcoin ETFs, it didn’t perform as well as gold due to weakened demand later in the year.

Spot ETFs for Bitcoin began the year with strong momentum, increasing their total assets under management (AUM) from $120 billion in January to a peak of $152 billion by July 2025. However, this growth did not last. By December, AUM had fallen to around $112 billion, indicating net outflows during price corrections and a slowdown in new investment. In contrast, gold ETFs experienced continuous inflows during the same timeframe.

Total net assets in spot BTC ETFs in 2025. Source: SoSoValue

Data from Glassnode highlighted that long-term holders of Bitcoin realized profits exceeding $1 billion daily for much of July, representing one of the highest profit-taking phases recorded. Although profit taking moderated in August, selling resumed later in the year. By October, long-term holders had offloaded about 300,000 BTC, worth around $33 billion—the most significant distribution since December 2024. This selling trend caused the supply of long-term holders to drop from 14.8 million BTC on July 18 to approximately 14.3 million BTC now.

Bitcoin profit taking peak by LTH in July. Source: Glassnode

Increased real yields during most of 2025 raised the costs associated with holding Bitcoin, while its relationship with the stock market remained relatively strong. In contrast, gold enjoyed demand driven by its safe-haven status and its use as a reserve. The resulting differences in demand dynamics help explain the shrinking BTC–gold ratio, indicating a cyclical adjustment rather than a permanent shift in Bitcoin’s long-term value proposition.

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