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Finance

Beyond Gold’s Highs: Why Bitcoin Lags, and What’s Next?

Bitcoin lags gold/stocks amid Fed cuts, stablecoin trends, & leverage. History suggests gains ahead.

byAndres Castro

September 25, 2025, 7:43 AM

Executive Summary

Bitcoin and altcoins are currently underperforming traditional assets like gold and stock markets, which have reached all-time highs, prompting questions about the crypto bull market’s trajectory.

CryptoQuant’s research identifies four primary reasons for this divergence: the timing of Federal Reserve rate cuts, stablecoin liquidity dynamics, leveraged trading strategies, and historical market behavior.

Historically, crypto markets, particularly Bitcoin, tend to “lag, then leap” after traditional assets experience gains, suggesting the current underperformance might be a precursor to future growth once liquidity cycles catch up.

The Story So Far

The current underperformance of Bitcoin and altcoins relative to traditional assets like gold and stocks is attributed to crypto’s historical tendency to lag in liquidity cycles, often benefiting only after initial capital flows into traditional assets following Federal Reserve rate cuts; a ‘risk-off’ sentiment reflected in stablecoins leaving exchanges despite record supply, indicating profit-taking or sidelined funds; and a prevailing trader preference for hedging and leverage strategies amidst sideways market action.

Why This Matters

Despite Bitcoin and altcoins currently lagging behind traditional assets like gold and equities, this underperformance is identified as a familiar historical pattern, suggesting crypto is at the end of the liquidity pipeline and benefits after traditional markets absorb initial capital. This indicates the current stagnation is likely a temporary phase rather than a failed bull market, with historical data suggesting such lags often precede significant future gains for Bitcoin once broader liquidity flows shift.

Who Thinks What?

XWIN Research Japan, an onchain analytics platform, believes that crypto’s current underperformance compared to traditional assets is a familiar historical pattern, attributing it to the timing of Federal Reserve rate cuts, stablecoin liquidity dynamics, and leveraged trading, and anticipates a future “leap” after an initial lag.

Some market observers are questioning the trajectory of the crypto bull market and whether crypto is truly becoming a mainstream asset class, given its stagnation or decline while gold and U.S. stock markets reach record highs.

Bitcoin and altcoins have notably failed to mirror the recent all-time highs achieved by gold and traditional stock markets this month, prompting questions about the crypto bull market’s trajectory. New research from onchain analytics platform CryptoQuant, specifically from contributor XWIN Research Japan, identifies four primary reasons for this divergence: the timing of Federal Reserve rate cuts, stablecoin liquidity dynamics, leveraged trading strategies, and historical market behavior.

Lagging Behind Traditional Assets

While gold and U.S. stock markets continue to post record highs, Bitcoin and the broader crypto market have remained stagnant or seen declines. This has led some to question whether crypto is truly becoming a mainstream asset class, but CryptoQuant suggests it’s a familiar pattern rather than a failure.

XWIN Research Japan argues that crypto is simply repeating historical patterns, typically lagging behind traditional assets in the early phases of economic shifts. They highlight that institutional capital tends to flow first into highly liquid assets like equities and gold.

The Impact of Fed Rate Cuts

According to XWIN, crypto, particularly altcoins, sits at the end of the liquidity pipeline. It only benefits when broader risk appetite expands, usually after traditional assets have absorbed initial capital flows.

The current market setup for Bitcoin and Ether mirrors patterns observed in previous cycles. XWIN noted a “front-run rally after the Fed’s rate cut, followed by a correction as liquidity failed to fully rotate into crypto.” Only after traditional assets cooled did BTC and ETH historically outperform.

Stablecoin Liquidity and Trader Behavior

Another significant factor is the state of stablecoin reserves. Although the overall stablecoin supply reached a record $308 billion this month, more stablecoins are reportedly leaving exchanges than entering them. This trend indicates a “risk-off” mentality or profit-taking among traders.

This off-exchange parking of liquidity suggests funds are being bridged, sidelined, or used in private markets rather than actively deployed to purchase Bitcoin or Ether. Additionally, data from derivatives platforms reveals a preference among traders for “hedging and leverage strategies,” which is a common response to sideways market action.

Historical Precedent: Lag, Then Leap

Despite the current underperformance, CryptoQuant’s analysis suggests that Bitcoin tends to “lag, then leap.” Historically, following equity all-time highs, Bitcoin has typically gained +12% within 30 days and +35% within 90 days.

While short-term headwinds like quantitative tightening (QT), Treasury liquidity absorption, and looming options expiries persist, the structural setup remains favorable for crypto once liquidity cycles catch up. This historical pattern suggests the current delay might be a precursor to future gains rather than an indicator of a failed bull market.