Gold Plunges to Worst Record Since 1983, Funds May Turn to Bitcoin and Other Assets Amid Liquidity Crisis

Gate News, March 23 — The gold market experienced a sharp sell-off, recording its worst weekly performance since 1983, prompting a global reassessment of the “safe-haven asset” logic. Amid ongoing geopolitical conflicts, gold prices declined instead of rising, indicating that market drivers are shifting from risk hedging to liquidity prioritization.

Analysts point out that this decline in gold prices is not due to a fundamental reversal but rather a result of concentrated liquidations in crowded trades. Nic Puckrin, founder of Coin Bureau, stated that in recent years, large-scale gold purchases by central banks combined with ETF inflows have increased market position density. However, in the current environment, these buy orders are gradually turning into potential selling pressure. Especially under the influence of war and export restrictions, some countries may be forced to use reserve assets to obtain liquidity.

Meanwhile, the bond market has become a key variable. The yield on the 10-year U.S. Treasury has continued to rise, driven by inflation pressures, tightening policies, and deleveraging, triggering a cross-asset sell-off chain. Gold has fallen about $600 in a short period, highlighting that even traditional safe-haven assets are vulnerable in a forced deleveraging environment.

Market sentiment is deteriorating in tandem. The Kobeissi Letter shows that the current retail investor bearish ratio has risen to 52%, reaching a high since 2025, reflecting a significant reduction in risk appetite. Against this backdrop, some institutional investors are beginning to rebalance their portfolios. Family office advisor Jake Claver noted that increasing funds are moving away from traditional stocks and bonds toward private markets, emerging economies, and digital assets.

Notably, cryptocurrencies like Bitcoin are once again gaining attention from institutional players. Analyst Chad Steingraber believes that as gold corrects, capital may gradually flow into undervalued digital assets. Although short-term volatility persists, once liquidity pressures ease, the crypto market could have rebound potential.

The market remains in a phase of “deleveraging first, then seeking new directions.” The historic decline in gold not only challenges traditional safe-haven logic but also indicates that, in a liquidity-driven environment, the mechanisms driving asset prices are undergoing profound changes.