Financial markets are experiencing a day of volatility this Tuesday, October 21st, marked by two seemingly contradictory narratives: a significant sell-off in precious metals and renewed optimism about the end of the war in Ukraine. In this context, Bitcoin (BTC) has managed to show resilience in the face of the panic that has swept gold.
Gold's single-day decline was the worst since 2013, with spot prices falling 6.3% in 24 hours. Silver suffered a similar fate, falling 8.7%.
The following graph shows the price of gold through 2025.
The decline was fueled by investors taking profits after a historic rally that left metal prices overvalued. As reported by CriptoNoticias yesterday, This overvaluation of gold could cause a rotation of capital into Bitcoin.
KKM Financial analyst Dan Deming said this a few days ago, before this fall.
Gold's superior performance compared to Bitcoin has led to overvalued portfolios and rebalancing. Analysts expect flows to shift to Bitcoin due to its high beta value. Gold’s strength signals an awakening for real assets, while Bitcoin continues to mature from a speculative vehicle to a legitimate store of value.
Dan Deming, KKM Financial Analyst
The catalyst for this gold profit-taking appears to be a significant reduction in geopolitical risk. European countries cooperate with Ukraine 12 proposals to end the war with Russia. The plan aims to freeze the conflict on current fronts, a position actively promoted by US President Donald Trump.
The proposal rejects President Vladimir Putin's demands to give up territory in exchange for peace, according to information revealed by Bloomberg. In return, it proposes the return of deported children, a prisoner exchange, security for Ukraine, and rapid action to join the European Union.
Sanctions against Russia they will rise graduallyand its $300 billion in frozen reserves will only be returned if Moscow helps rebuild Ukraine.
A peace council chaired by Trump will oversee implementation of the plan. The US president, who will soon meet Putin in Budapest, urged both sides to “stand still”. Ukrainian President Volodymyr Zelenskiy said that although nothing was certain, “we are getting closer to the possibility of ending the war.”
While gold, the traditional safe-haven asset, collapsed with no prospect of peace, Bitcoin showed divergent behavior. The following graph shows the price of digital currencies until 2025.
Although it fell below $110,000 the day before, Bitcoin regains momentum, surpassing $113,000 level.
