In recent times, a growing belief has emerged within financial markets: Bitcoin is poised to replace gold as a safe-haven asset. The leading cryptocurrency has surged, reaching a record high of nearly $112,000 last week. In contrast, the value of gold has diminished, sliding down towards $3,300 per ounce after recently hitting an all-time high of nearly $3,500. Data compiled by Bloomberg indicates that over the past five weeks, Bitcoin ETFs have attracted more than $9 billion in inflows, while gold-backed funds have experienced outflows exceeding $2.8 billion. The pressure on the precious metal has largely been due to easing trade tensions, particularly with the recent U.S.-China agreement to suspend tariffs for 90 days. Simultaneously, Bitcoin investors have found renewed confidence, bolstered by a general increase in risk appetite, especially given the ongoing uncertainty which might elevate the digital currency’s status as an alternative store of value.
Bitcoin vs Gold: Who Will Come Out on Top?
These recent developments have reignited the debate over whether Bitcoin can genuinely serve as a viable alternative to gold for safeguarding wealth. Historically, Bitcoin has faced criticism for its high volatility, which made it seem less suitable as a safe haven during uncertain times. However, compared to previous years, price fluctuations appear to be stabilizing, which supports its consideration as a more reliable asset.
Geoff Kendrick, the Global Head of Digital Asset Research at Standard Chartered, noted that “Bitcoin is more adept at mitigating risks associated with the financial system, owing to its decentralized nature.” He emphasized this point while comparing Bitcoin’s performance to gold’s strength during the recent tariff escalations. Kendrick remarked that Bitcoin can act as a hedge through two primary avenues: one related to private sector risks—such as the collapse of Silicon Valley Bank in 2023—and the other concerning government institution risks. “The recent threats to the independence of the Federal Reserve, particularly regarding the potential replacement of Powell, fall into this second category, alongside tariff escalations and broader concerns about the credibility of U.S. fiscal policy,” he explained.
Dilin Wu, a research strategist at Pepperstone, also pointed out that Bitcoin has shown reduced sensitivity to the fluctuating performance of tech stocks on Wall Street. “In the last month, Bitcoin’s intraday correlation with the Nasdaq, the dollar, and even gold has significantly decreased,” he stated. “These trends imply that Bitcoin may increasingly be perceived as a hedge, or even an uncorrelated asset class, rather than merely a speculative asset.”
Christopher Wood, Global Equity Strategist at Jefferies, strikes a consensus by advocating for both Bitcoin and gold as safe havens to protect against market volatility. “They remain the best shields against currency devaluation,” he asserted.
