Bitcoin and Gold: A Comparison of Digital and Traditional Assets
While Bitcoin is sometimes referred to as "digital gold," the conventional wisdom suggests that it falls far short of gold in terms of reliability and stability. But is gold's price truly as rock-solid as commonly believed?

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Common Ground Between Both Assets and Capital Flows
From this perspective, gold and Bitcoin share a common feature: the limited influence of actual demand on their pricing. As a recent trend, capital flows from excessively inflated gold to Bitcoin—which is experiencing improved regulatory frameworks—may be partially attributed to this structural similarity.
Particularly for wealthy individuals in regions where confidence in domestic financial systems is low, holding digital assets like Bitcoin as part of a diversified investment strategy, alongside traditional cash and precious metals, is increasingly becoming a rational choice from a risk-hedging perspective.

The Impact of Market Sentiment on Pricing
Gold price fluctuations tend to be more strongly influenced by investor sentiment and safe-haven demand than by actual underlying demand. Factors such as heightened geopolitical risks, inflation concerns, and financial market instability often serve as primary drivers of price increases. This suggests that gold essentially shares speculative characteristics similar to those of Bitcoin.

Price Formation Through Gold's Demand Structure
Examining the consumption breakdown of gold's new supply reveals that approximately 50% goes to jewelry, 40% to investment purposes (ETFs, bullion, and coins), and the remaining 10% to industrial applications. This indicates that actual demand-based consumption accounts for only about 60% of the total (50% jewelry + 10% industrial use), while the remaining 40% is supported by pure investment demand.