Bitcoin’s buzz is gone. Investors chose real gold in 2025 | Nils Pratley
Another week, another record high for the price of gold.And another blow to the bitcoin fan club’s hopeful thesis about owning “digital gold”.This year has been hard for the bitcoin brigade: while real gold soared in value, their cryptocurrency didn’t.Correlation went out of the window.Gold is up 70% so far in dollar terms; bitcoin is down 6%.
In theory, conditions should have been perfect for bitcoin if, like gold, it is supposed to be a store of value in uncertain times.Geopolitical tensions have been high all year, with Donald Trump’s unclear intentions towards Venezuela now added to the mix.Or, if you take the view that bitcoin is a hedge against currency debasement by governments, the news flow ought to have been encouraging.The US budget deficit remains enormous: the International Monetary Fund predicts the country’s debts will climb from 125% to 143% of annual income by 2030, or more than Greece and Italy.Alternatively, if bitcoin is meant to be a vehicle for tech-related enthusiasm, the artificial intelligence revolution should have offered semi-helpful breezes.
Beyond the debate about a bubble in AI assets, chipmaker Nvidia’s share price is still up by a third since January.Meanwhile, the regulatory backdrop was outright supportive.Crypto exchange-traded funds are now marketed by mainstream financial houses.The crypto-cautious UK financial regulator has published proposals to regulate many areas of the crypto market.Therein – perhaps – lies half an explanation.
Bitcoin is simply more boring now that it has been incorporated into the financial mainstream.If JP Morgan and BlackRock are referring to bitcoin as a regular class of asset, something of the revolutionary spirit is lost.Google searches for “bitcoin” are merely steady these days.Even Elon Musk has other things to tweet about.As the chart shows, the paths of gold and bitcoin only properly diverged in October during a rapid sell-off in the latter.
Precisely what happened on 10 October is still debated, but large selling by leveraged holders of bitcoin into a thin market, in reaction to a Trump tariff threat towards China, is part of the story.The point, though, is that bitcoin didn’t bounce back afterwards, as stocks and precious metals did.The crypto market as a whole shed more than $1tn of value in six weeks.From a high of $126,000 in early October, bitcoin now stands at roughly $87,000.In a research note a month ago, Deutsche Bank analysts offered five factors as an explanation of the fall: a broader “risk-off” sentiment in markets in October, hawkish signals on interest rates from the Federal Reserve, less regulatory momentum than expected, thin liquidity and outflows from institutions, and profit-taking by long-term holders.
Its conclusion: “Whether bitcoin stabilises after this correction remains uncertain,Unlike prior crashes, driven primarily by retail speculation, this year’s downturn has occurred amid substantial institutional participation, policy developments and global macro trends,”For true bitcoin believers every setback is a buying opportunity,Their faith tends to be unshakable and, given how the cryptocurrency has recovered from falls in previous years, one can’t say they are definitely wrong,Yet it does also feel as if something cracked this year.
When demand was high for a proper defensive hedge, investors preferred gold (and silver, which performed even better) over computer code that has failed to take off as a medium of exchange.And the year ends with questions being asked about the real depth of the market for bitcoin and its imitators.The speculative buzz ain’t what it used to be.
Keir Starmer told closer EU trade ties ‘strategic necessity’ for UK firms
Keir Starmer’s government has been told a closer EU trade deal is a “strategic necessity” for companies in Britain as growing numbers of exporters find it tougher to do business under the UK’s post-Brexit agreement.Calling on Labour to accelerate its reset with Brussels, the British Chambers of Commerce (BCC) said the UK’s existing trade and cooperation agreement (TCA) was failing to help them grow their sales in the EU.More than half (54%) of exporters in a survey of almost 1,000 businesses – the majority of which were small and medium-sized firms – said the trade deal negotiated by Boris Johnson’s government and enacted in 2021 was not helping them.Highlighting an ongoing economic hit from Brexit, the BCC said this was a 13 percentage point increase from the proportion of firms that were unhappy in a similar survey a year earlier.Adding to pressure on Labour to take action to support the economy after a challenging year for businesses, it said that just four out of the 946 firms surveyed thought the support from the government on dealing with trade policy changes was comprehensive
Labour calls to rejoin EU customs union will become harder for Starmer to resist
When Keir Starmer stood on the Labour conference stage in 2018 and defied Jeremy Corbyn to call for a second Brexit referendum with remain as an option, it put him in pole position to become the next Labour leader.Starmer must now feel a sense of deja vu watching Wes Streeting, the most out-and-out pretender for the leadership, follow a similar playbook. In an interview over the weekend, the health secretary strayed from the official government line to call for “a deeper trading relationship” with the EU.Speaking to the Observer, Streeting implied that joining a customs union with Europe would give Labour a distinctive message with which to take on Nigel Farage at the next general election.To many Westminster observers, the obvious point is that, like Starmer’s intervention in 2018, Streeting’s remarks align him with the Labour members and voters who overwhelmingly support stronger ties with Europe
More than 75% of Labour, Lib Dem and Green voters think PM should open talks on joining EU customs union – as it happened
Wes Streeting, the health secretary, used an interview with the Observer published at the weekend to suggest that he favours joining a customs union with the EU. This is something that Keir Starmer has ruled out.But Labour supporters back Streeting on this. According to YouGov polling for the Times, 80% of people who voted Labour at the last general election say a future leader should open negotiations on joining a customs union with the EU.The polling also found that around 70% of people who voted Labour, Lib Dem or Green at the last election said that a future leader should open talks on rejoining the EU
Rachel Reeves sets early March date for spring statement as OBR prepares forecast
Rachel Reeves has set a date of 3 March for an early spring statement, as Labour attempts to draw a line under a year of tax speculation that business leaders blamed for damaging Britain’s economy.Announcing a date to prioritise “stability and certainty”, the Treasury said the chancellor had asked the Office for Budget Responsibility (OBR) to prepare forecasts for the economy and public finances.Reeves has come under fire over the buildup to this year’s autumn budget after months of leaks, briefings and tax speculation contributed to a downturn in consumer spending and businesses freezing their investment plans.Britain’s economy unexpectedly shrank in October, while the Bank of England forecasts that growth is on track to flatline in the fourth quarter. Business groups have also warned of a sharp fall in private sector activity at the turn of the year, with companies putting their spending decisions and hiring plans on hold
Britain’s economy has been damaged by Brexit. But what should ministers do about it?
Almost a decade on from the Brexit vote, the verdict is clear. Britain’s immediate doomsday economic scenario might not have come to pass. But after years of political paralysis – and with the eventual introduction of tougher trade barriers in 2020 – trade, investment and growth in living standards have all suffered.Just as it was on the morning after the 2016 referendum, the big fight is about what the government should do in response.At the weekend, Wes Streeting became the latest frontbench Labour politician to call for a deeper trading relationship with the EU
Streeting urges closer trading ties with Europe to grow UK economy
A deeper trading relationship with the EU would be the best way of growing Britain’s economy, which has an “uncomfortable” level of tax, Wes Streeting has said.The health secretary said it would not be possible for any partnership with the EU to “return to freedom of movement”, but his comments appeared to leave the door open to the idea of a customs union.His remarks on the EU appear to go further than the government’s position, which has ruled out a customs union as it seeks deeper trading relations with Brussels. Some in the cabinet would like No 10 to go further in its ambitions in order to improve the UK economy.Streeting spoke out about the EU, the economy and his own ambitions in a wide-ranging interview with the Observer, while stressing that he was not after Keir Starmer’s job
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