The People’s Bank of China recorded its 13th consecutive month of gold purchases, extending one of its most deliberate reserve management campaigns since the crisis.
These purchases signal the world’s second-largest economy’s deepening shift toward sovereign-controlled, seizure-resistant assets.
Against this backdrop, crypto analysts see the People’s Bank of China’s buying spree not as a bullish spark for Bitcoin, but as a macro signal that reinforces the logic behind the flagship digital asset.
This relationship is significant given that China has not purchased Bitcoin and there is nothing in its preparatory strategy to signal future cryptocurrency adoption.
Why are sovereigns rebuilding their “external funding” shields?
China has increased its reported gold holdings since the end of 2022, following a historic surge in purchases by the world’s central banks, according to official disclosures.
China’s reported gold allocation is still small compared to its peers such as the United States, but direction is more important than share. That’s because relentless bidding from one of the world’s largest reserves management companies doesn’t just affect the price of bullion. It changes the narrative structure of reserves composition.
To understand why the crypto market views the People’s Bank of China’s actions as justified, we need to consider how “external money” works.
In financial economics, “internal money” is defined as debt owed to others. For example, U.S. Treasuries exist solely as a promise of payment by the U.S. government. Conversely, “external money” refers to assets that are not the responsibility of others. Positive equity that is physically settled rather than through a correspondent banking layer that is subject to garnishment.
This distinction became evident after the US and EU froze Russian central bank assets in 2022. That moment forced sovereigns to reassess what it means to hold “risk-free” assets in a geopolitical system where access can be contested.
Gold stored domestically is less susceptible to deterioration. That alone explains why China occupies such a large part of the Axis.
But this is where the cryptocurrency analogy quietly emerges. Bitcoin is the only traded asset in the world that behaves like a digital external currency. There is no issuer, no dependence on foreign custodians, and no counterparty risk.
In this way, the People’s Bank of China’s strategy inadvertently legitimizes the motivation behind Bitcoin’s creation.
Western institutional allocators understand the nuances. They do not equate China’s gold purchases with BTC’s tacit support.
They point out that the world’s largest authoritarian economies are hedging sovereign risk through scarce holdings, and the same impulse is fueling private sector demand for Bitcoin amid deepening financial and geopolitical tensions.
Rising correlation between Bitcoin and gold
Market data suggests this is more than just theoretical consistency or narrative convenience.
As global liquidity conditions change, the statistical relationship between the two assets has become much tighter, suggesting that sophisticated capital is beginning to treat them as separate representations of the same transaction.
The 180-day correlation between Bitcoin and gold approached a historic high of 0.9 in October, according to data from analytics firm CryptoQuant.
Although this number has since settled to 0.67 as of early December, the sustained positive relationship marks a departure from Bitcoin’s history as a purely risk-on technology strategy.
Market analysts said the lockstep rally supports the hypothesis that both assets are responding to the same macro factors, such as currency weakness and global sovereign risk.
Commenting on this correlation, CryptoQuant CEO Ki Young Ju said:
“Gold continues to hit new all-time highs. The correlation between Bitcoin and gold remains elevated. The digital-gold story is not dead.”
For traders, Bitcoin is acting more like a play on global liquidity and sensitivity to sovereign balance sheets than a high-beta tech stock. This means the asset reacts to fiscal stress and geopolitical hedging more like bullion than the Nasdaq.
Still, this analogy has its limits. Gold is embedded in central bank infrastructure and benefits from thoroughly standardized custody, liquidity and legal frameworks. However, BTC is unstable, politically contentious, and unevenly regulated across jurisdictions.
financial calculations
Beyond the geopolitical maneuvering lies the pure mathematics of fiscal control.
The trigger for the flight into hard assets may be related to the deterioration of the US balance sheet. This factor is forcing investors to reconsider the safety of government debt.
In 2024, the United States spent $881 billion on debt interest payments, exceeding a critical fiscal threshold. This number is projected to increase to $970 billion in 2025 and $1 trillion in 2026.
While this environment creates long-term structural headwinds for the bond curve, it also acts as a powerful tailwind for rare non-sovereign assets such as gold and Bitcoin.
This is because gold supply growth is slow and predictable by commodity standards, and new production cannot be immediately called upon when demand spikes.
Meanwhile, the supply of Bitcoin is even more limited. The publication schedule is mathematically fixed and the final ceiling is programmed.
This difference in degree is important to Bitcoin theory. If major economies are willing to absorb the opportunity cost of holding non-yielding reserve assets like gold because of their emphasis on scarcity and sovereign control, it becomes easier for crypto investors to argue that scarcity itself carries a financial premium.
Same logic, different world
However, this comparison is not symmetrical and the risks are still distinct.
Gold is a reserve asset with a long-standing legal and operational framework. It is widely accepted among government officials and is undisputedly on central bank balance sheets. Meanwhile, Bitcoin remains unstable, politically charged, and unevenly regulated.
At the same time, central banks can rebalance gold with established market infrastructure, but adopting Bitcoin will require explaining new technology to skeptical lawmakers.
But the macrologic that these two assets share persists. This is because these assets are positioned as a hedge against falling land prices and as a diversification tool when real yields are low.
In fact, gold’s rise and Bitcoin’s rise to record levels reflect how non-yielding assets outperform when investors focus on protection rather than carry.