Goldman Sachs: If the Fed's credibility is damaged, gold prices may reach $5,000, and Bitcoin could rise to $220,000.

In 2025, the gold market performed strongly, reaching a historic high of $3630 per ounce, outperforming Bitcoin and the S&P 500 index. Banking giant Goldman Sachs predicts that if the independence of the Fed is compromised, gold prices could soar to $5000. This prediction stems from the ongoing pressure the Trump administration has placed on the Fed, particularly following the recent firing of board member Lisa Cook.

The article points out that there is a historical correlation between gold and “digital gold” Bitcoin. If the price of gold continues to rise, the price of Bitcoin may also soar to $185,000, and it could even break through $220,000 when gold reaches $5,000. The Fed may cut interest rates in September, which would inject liquidity into the market and potentially accelerate Bitcoin's catch-up with gold's upward trend.

The correlation between Bitcoin and gold still exists

Gold prices have been dominating the market, sparking heated discussions, with their performance in 2025 thus far outperforming Bitcoin and the S&P 500 index. Banking giant Goldman Sachs boldly predicts that if the Fed's credibility is called into question, gold prices could soar to $5,000. Additionally, a weaker dollar could further accelerate the rise of this precious metal.

Earlier today, gold futures extended their rally to a historic high, reaching $3630 per ounce, with total holdings of gold ETFs at the end of August hitting a record 2905 tons. Gold has outperformed BTC in 2025, rising 37% year-to-date, while BTC's increase is 22%. The five-year chart shows a strong correlation between physical gold and “digital gold” (i.e., Bitcoin).

(Gold vs Bitcoin Performance | Source: Tephra Capital)

Amid all the macro uncertainties surrounding Trump’s tariffs and rising inflation, gold prices have risen linearly to a historic high. According to the above chart, if Bitcoin prices catch up with gold’s upward trend, they could soar to $185,000 within the next 200 days. This underscores that BTC has the potential to rise another 70% in the coming months.

As the possibility of the Fed cutting interest rates at the September Federal Open Market Committee (FOMC) meeting is increasing, Bitcoin prices may soon catch up with gold's performance in the context of liquidity injection. Fed Governor Chris Waller has called for a 25 basis point rate cut at the upcoming FOMC meeting.

How much can BTC rise if gold hits 5000 dollars?

The banking giant Goldman Sachs made a bold prediction, stating that if the independence of the Fed is threatened after recent challenges by the Trump administration, the price of gold could soar to $5000. The recent firing of Fed governor Lisa Cook by President Donald Trump has sparked discussions. After Cook filed a countersuit against Donald Trump, claiming that the president's interference threatens the independence of the Fed. Goldman Sachs analyst Samantha Dart mentioned this development during an interview with Bloomberg.

“The erosion of the Fed's independence may lead to higher inflation, lower stock and long-term bond prices, and a deterioration of the dollar's status as a reserve currency. We estimate that if 1% of the privately held U.S. Treasury market flows into gold, with all else held constant, the price of gold will rise to nearly 5000 dollars per ounce.”

Goldman Sachs outlined several potential scenarios for gold, expecting a benchmark target of $4,000 per ounce by mid-2026. The bank also emphasized a tail risk scenario of $4,500 and noted that prices could approach $5,000.

If we infer the correlation between BTC and gold, for every 15% increase in the price of gold from the 2020 baseline, the price of Bitcoin will increase by 250%. Based on this, when the price of gold reaches $5,000, BTC could rise to at least $220,000.

Conclusion

The strong performance of gold prices and their correlation with Bitcoin have brought a new bullish narrative to the cryptocurrency market. Goldman Sachs' predictions and challenges to the Fed's independence highlight the growing demand from investors for non-sovereign, hard assets amid increasing macroeconomic uncertainty. If the Fed indeed loses credibility due to political pressure, leading to a weaker dollar and heightened inflation, then the value of gold and Bitcoin, as tools against currency devaluation, will be further emphasized. Therefore, Bitcoin can benefit not only from its own ecological development but may also gain strong external momentum from the macro uptrend of gold, making a future price reaching six figures not out of reach.