A sweeping $1.8 billion liquidation wave has hit Bitcoin traders just as gold pushes to fresh highs, reigniting debate over Bitcoin’s role as “digital gold.” Data show about $1.65 billion of the liquidations were long positions, and roughly 407,000 traders were wiped out as Bitcoin slid below $112,000. CoinGlass liquidation charts captured the scale of the flush across long and short bets.

Gold’s surge and Bitcoin’s pullback have driven a clear divergence. On Sept. 23 gold traded near a record high of about $3,790 per ounce, while Bitcoin trended downward through the week, undermining the argument that BTC reliably hedges macro risk the way precious metals do.

Analysts point to macro forces behind the split. MEXC Research’s chief analyst says the selloff is a textbook example of crypto’s structural fragility once leverage accumulates. The U.S. dollar regained strength after the Fed’s rate cut — a move that surprised markets — and, combined with elevated Treasury yields and upcoming inflation data, has kept crypto markets on the defensive. Those conditions pressured speculative positions and amplified forced liquidations.

Industry leaders note gold’s deeper, more established role as a geopolitical and macro hedge compared with Bitcoin. When the dollar strengthens, historically gold has responded more predictably, while Bitcoin’s correlation to risk assets and sentiment can cause it to underperform the “digital gold” narrative during periods of dollar appreciation and higher real yields.

What this episode makes clear is that leverage remains a key vulnerability for crypto markets. Traders and DeFi participants should watch dollar strength, Treasury yields and incoming inflation prints for cues on risk appetite, while the divergence between gold and BTC will be closely watched as a barometer of whether Bitcoin can increasingly trade as an independent macro hedge or remains tied to broader risk sentiment.