Gold slips as macro forces tilt the scales, Bitcoin clings to liquidity trend
Gold is flirting with a technical bear market — roughly a 20% drop from its January all-time high — even as geopolitical uncertainty in the Middle East has intensified. Since the conflict began in late February, gold has actually fallen about 10%, undermining its traditional role as the go-to safe haven.
Macro forces are pressuring the metal. Markets have pushed rate-cut expectations further out, with policy now expected to remain restrictive through December 2026. At the same time, higher oil prices tied to geopolitical risk are lifting inflationary pressure, strengthening the “higher for longer” rate narrative — a structural headwind for non-yielding assets like gold.
Viewed through a liquidity lens, however, the picture is more nuanced. When adjusted for M2 money supply (cash, deposits and other liquid money), gold’s current level lines up with liquidity-adjusted peaks seen in 1974 and 2011 (when nominal prices were about $200 and $1,800 per ounce). That suggests gold may be consolidating at an elevated, cyclical floor relative to global liquidity, rather than collapsing to fundamentally cheap levels.
For crypto traders, Bitcoin’s liquidity-adjusted story looks different. On an M2-adjusted basis, Bitcoin sits in a consolidation pattern similar to 2024 while retesting its 2021 highs. Historically, each crypto cycle has pushed Bitcoin above prior liquidity-adjusted peaks, and with BTC roughly 40% below its October high, the current pullback could be a typical consolidation ahead of another leg up.
Market linkage has tightened recently: gold and Bitcoin have traded almost in lockstep — tick for tick — since Bitcoin broke down from the $5,000 mark on Wednesday, hinting at a temporary positive correlation after periods of divergence between the metals and crypto markets.
Bottom line for crypto investors: macro drivers — interest-rate paths, inflation from energy shocks and liquidity conditions — are reshaping the relative narratives for gold and Bitcoin. Gold is under pressure from higher rates but looks elevated on a liquidity-adjusted basis; Bitcoin is consolidating within a historical pattern that has often preceded fresh upside when money supply dynamics turn supportive.
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