Gold price crash? Market sentiment is shifting toward Ethereum and U.S. equities.

Recently, gold prices have plunged. The flagship gold ETF, SPDR Gold Shares (GLD), fell more than 6%, while gold miner ETFs such as VanEck Gold Miners (GDX) dropped nearly 10%. It was the steepest decline in 12 years, and the sudden shock to one of the world’s most trusted safe havens has left markets unsettled.

This decline has sparked two contrasting interpretations. The first is pessimistic: that the coming crisis may be so severe that even gold cannot serve as a reliable hedge. The second is more constructive: that capital parked in safe assets is now shifting toward risk assets. Given today’s macro environment, K3-Lab views the latter as more persuasive. Expectations for AI-driven growth, declining oil prices supporting inflation stability, and resilient U.S. economic performance all underpin greater risk appetite. Added to this, political and financial conditions are increasingly tilted toward market-friendly outcomes. Let us dig deeper.

2. The Fund Managers’ Inevitable Choice

Where will the money flowing out of gold go? A key factor lies in the position of fund managers. Recent reports indicate that only 22% of fund managers have outperformed the market this year. The vast majority are lagging their benchmarks, putting their professional standing under serious pressure.

With barely two months left in the year, these managers have little choice but to chase risk assets in an effort to make up lost ground. Entering a market that has already rallied is uncomfortable, yet inaction is not an option. This “career risk” becomes a structural driver of inflows. As a result, the combination of capital exiting gold and fund managers’ performance pressure is laying the groundwork for a stronger rally.

3. Politics Unlocks Liquidity – Trump and the TGA

Another layer is political. Trump recently suggested that a deal with the Democrats could lead to an end of the government shutdown. This is no mere talking point. At present, the U.S. Treasury General Account (TGA) holds enormous sums of cash. Under normal conditions, tax receipts and bond issuance flow into the TGA and are then recycled into the economy via government spending. But with the shutdown in place, inflows have continued while outflows were blocked, causing liquidity to be drained from the market and fueling financial stress.

As K3-Lab argued in its previous report “Regional Bank Stress? If the Shutdown Is the Culprit, There’s No Reason to Halt Investment,” the sequence of political gridlock → shutdown → rising TGA balance → falling reserves → credit stress has been at the heart of recent instability. Ending the shutdown would therefore do more than reopen government—it would release trapped liquidity back into the market. That Trump raised this ahead of APEC only underscores its importance.

4. The Stage Is APEC

Yet, liquidity does not flow on technical grounds alone. The market needs a political and international rationale to accept it. That stage is the APEC summit.

If the U.S. and China reach even a limited agreement, the reduction of trade and tariff risks will provide precisely the justification investors require. In that scenario, the forces now converging—capital rotation out of gold, fund managers’ buying pressure, and the release of TGA balances—could merge into a unified wave of inflows. APEC would thus serve as the political green light for liquidity to move decisively into risk assets.

But one final spark remains.

5. The Final Catalyst: FOMC

That spark is the FOMC meeting at the end of October. Markets already view a rate cut as virtually certain. Should Chair Powell deliver not only a cut but also a dovish message, investor sentiment could surge.

If this dovish shift coincides with progress at APEC, the market will secure both the liquidity and the legitimacy for a sustained rally. At the same time, Japan’s newly installed prime minister—who is supportive of additional monetary easing—has reduced the risk of disruptive yen carry unwinds. In other words, the global backdrop is aligning in a way that could channel capital straight into U.S. risk assets. The door to a bubble could open.

6. Approaching the Threshold of a Bull Run

The sequence is increasingly clear:

• Gold’s plunge signals a shift toward risk appetite.

• Fund managers’ underperformance drives forced inflows.

• Trump’s shutdown comments point to imminent TGA liquidity release.

• APEC offers political justification for capital rotation.

• FOMC can seal the deal with dovish policy.

If these five pieces fall into place, the market could surge in a powerful, short-term bull run. Risks remain—APEC talks could fail, or the FOMC could surprise with hawkishness—but at present the balance tilts decisively toward upside. Any pullback would likely be met not with fear, but with buying.

7. Conclusion: Gold’s Collapse as a Signal

The recent crash in gold prices does not merely reflect fear. It may well be the signal of a new rally in the making. Performance-driven inflows from fund managers, the release of TGA liquidity, political momentum from APEC, and dovish confirmation from the FOMC together create the conditions for a risk-asset bull run.

Gold has always been more than a hedge—it is the market’s compass. This time, its decline points not toward crisis but toward the opening chapter of a new risk-asset rally. For investors, now is the time to re-examine allocations, particularly in equities and Ethereum, to prepare for what lies ahead.