The real reason behind Bitcoin's weakness in 2025, based on increased gold exposure

The asset markets of the first year of 2025 sent intriguing signals. While Bitcoin showed weakness, gold and the Nasdaq moved in the opposite direction. Traditional asset advocates cite this as evidence that cryptocurrencies are ultimately just speculative assets. But this is only a surface-level interpretation. For a deeper analysis, we need to examine the flow of dollar liquidity and the expansion of gold exposure by sovereign nations together.

The fundamental question is this: in an environment where dollar liquidity is shrinking, why did only gold and stocks rise? Behind this paradoxical phenomenon lies a structural change in the international financial order. In particular, the gold exposure strategies of central banks became the most critical determinant of the 2025 asset markets.

Distrust in US Treasuries and Accelerated Gold Purchases

Since the 2008 financial crisis, a decisive change has begun in the international financial system. The Federal Reserve has supplied large amounts of dollars through quantitative easing. This raised the first questions about the dollar-based reserve currency system.

A more decisive moment was the freezing of Russian assets in 2022. The US government took measures to freeze Russia’s treasury holdings, which is the world’s largest commodity exporter and a nuclear-armed nation. This event sent shockwaves through the international financial order. If the US can confiscate Russia’s assets, there was a rapidly spreading concern among global treasury officials that weaker countries could face the same threat.

The result was a rapid expansion of gold exposure. Countries that could no longer rely solely on US Treasuries began to accelerate gold purchases. Central banks are buyers insensitive to price fluctuations. If the risk of asset seizure can be eliminated, a slightly higher gold price is not an issue. Securing sufficient gold exposure is all that matters.

Central Banks’ ‘Infinite Appetite for Gold’

Chart data makes this clear. Over the past 20 years, the proportion of gold holdings by central banks has steadily increased. Experts analyze that if the current global central bank gold reserve ratio returns to the levels of the 1980s, gold could rise to $12,000 per ounce. This is not an absurd speculation.

Has the price of gold risen due to collective investments by retail investors? No. Because the ratio of the most popular way to trade gold, the GLD(SPDR Gold Shares ETF), divided by the spot gold price, has been declining. This is evidence that it is not retail investors flooding into the market.

So, who is buying gold? The answer is simple: central bank governors worldwide. For them, expanding gold exposure is no longer a choice but a necessity.

Gold Rising as a Trade Settlement Currency

A more noteworthy phenomenon appeared in December 2025. The US trade deficit was recorded at a historically low level. According to the US Department of Commerce, the goods export-import gap decreased by 11% month-over-month to $52.8 billion, the lowest since June 2020.

What drove this change? The export of non-monetary gold from the US. In August, exports increased by 3% to $289.3 billion, mainly driven by non-monetary gold. Over 100% of the US trade balance improvement was due to increased gold exports.

The flow of gold is as follows: gold exported from the US to Switzerland undergoes refining and re-melting, then is transported to China, India, and emerging economies that lead in physical manufacturing and commodity exports. Ultimately, this gold functions as an international trade settlement medium and flows back to the US.

This is not just simple commodity trading. It signifies that the global reserve currency status is being restructured from the dollar to gold. The increasing use of gold by countries to settle trade deficits indicates the formation of a new international financial order.

Beyond Inflation Hedge: Gold Exposure

Traditionally, gold has been perceived as an inflation hedge. Since the 1930s, gold prices have roughly tracked the US Consumer Price Index (CPI). However, since 2008, gold prices have risen at a rate significantly exceeding inflation, and this trend has accelerated since 2022.

Does this mean a bubble? No. The expansion of central bank gold exposure goes beyond inflation hedging. It reflects a decline in confidence in the US dollar system itself. Within the fiat currency system, gold is no longer just an asset but a means for sovereign nations to protect themselves from geopolitical risks.

The Logical Background of Bitcoin Weakness

Now, the reason why Bitcoin shows weakness in 2025 becomes clear. While Bitcoin offers technological innovation and decentralization of finance, it is not considered within the context of central bank asset allocation structures.

Central banks are large, price-insensitive liquidity providers. If the threat of asset confiscation is real, central banks would choose gold, which has a proven trustworthiness of 10,000 years. The weakness of Bitcoin is not a valuation decline as a tech asset but a reflection of changes in the macro liquidity environment.

Even in an environment of shrinking dollar liquidity, gold rises because the central bank gold exposure strategy operates independently of the general liquidity cycle. This is a structural and strategic choice, not a temporary change driven by the economic cycle.

The Paradox of Nasdaq Rise and Gold Exposure

Meanwhile, the Nasdaq continued its upward trend unlike Bitcoin. The background for the US tech-heavy Nasdaq’s rise is the active credit supply policy of the Trump administration and increased national support for the AI industry. This is an asset-boosting policy through dollar credit creation.

Paradoxically, while the US supports Nasdaq companies to the level of nationalization, global central banks are accelerating their exit from US assets. Looking at China’s capital markets, in the early stages of nationalization, stock prices tend to be strong, but in the long run, political goals overshadow profitability, leading to underperformance.

New Standards for Asset Allocation in 2025

In conclusion, the divergence in asset markets in 2025 was an expected outcome. In an environment of shrinking dollar liquidity:

• Central bank-level asset allocation: Focused on expanding gold exposure to hedge geopolitical risks
• Tech stock markets: Selectively strong due to direct US government support policies
• Cryptocurrencies: Technical weakness driven by macro liquidity cycles

This period of expanding gold exposure signifies a transitional phase in the international financial order. The 100-year dollar-based reserve currency era is being fundamentally restructured, and in this process, gold is returning to its historical role.

What investors should focus on is not the short-term weakness of Bitcoin but the long-term implications of increased central bank gold exposure. This is a signal of a new global economic order and will deeply influence future monetary policies and asset allocation strategies of each country.