Bitcoin and gold actually have a lot in common. They both straddle the line between assets and currencies. Their finite supply—not controlled by any government—appeals to investors seeking protection against potential inflation. And neither throws off any cash, so investors who want to earn a profit need prices to rise.
Their fortunes, however, have diverged lately. Bitcoin’s price has declined 24% since hitting a record high of more than $109,000 on Jan. 20—the day crypto-friendly President Donald Trump took office. Gold, on the other hand, has kept rallying, gaining nearly 8% in the same span. (Both still have seen handsome gains over the past year.)
The contrast highlights the different factors driving the two assets’ prices. More importantly, it also suggests that investors looking for a store of value—or even an alternative investment uncorrelated to the stock market—would probably do better with gold over Bitcoin.
“Gold is a safe haven,” says Eric Wallerstein, chief markets strategist at Yardeni Research. Yardeni sees gold prices hitting $4,000 by the end of the decade, but doesn’t maintain a Bitcoin target. “While there are probably some people who tell themselves they’re buying Bitcoin as a long-term hedge against U.S. inflation or the financial system, what it really comes down to is that it’s a super speculative asset.”
Bitcoin’s annual price volatility has been about 50% in recent years, according to BlackRock, compared with about 15% for gold.
Bitcoin’s identity as a risk asset has come front and center lately, as big-name growth stocks have also stalled alongside the digital currency, which traded at $84,525 on Friday. Trump’s decision to launch a $Trump meme coin—interpreted cynically by some crypto fans—may be one reason for fading investor enthusiasm. But a general uneasiness about the tech sector and broader economy could be another.
Worries about the breakneck pace of artificial intelligence spending, tariffs, and government budget cuts—along with weak consumer sentiment numbers—have stoked stock market uncertainty. For instance, the Magnificent Seven tech stocks, which drove stock market returns in 2024, have fallen roughly 7% since Election Day through Friday afternoon.
“When Trump won the election, there was a rush of exuberance into everything,” says Trade Nation Senior Market Analyst David Morrison. “Now the rally is tired…there is a bit of a de-risking going on.”
Bitcoin’s current struggles are especially notable because—in theory—right now should be good times. The cryptocurrency rocketed after Trump’s election victory, amid promises of a friendly regulatory environment and perhaps even a Bitcoin strategic reserve. The digital asset appeared to be gaining more mainstream acceptance in the investment community, as more asset managers, including BlackRock, began sponsoring Bitcoin exchange-traded funds.
Meanwhile, the market jitters hurting Bitcoin do, in fact, mean good times for gold. The precious metal settled at$2,848.50 Friday, just 3.9% below its record high of $2,963 hit on Monday. Gold is in the middle of a multiyear bull market that began around the time of Russia’s February 2022 invasion of Ukraine.
Geopolitical worries have always been bullish for gold. The U.S. decision to freeze Russian assets days after the invasion spooked central banks around the world—they began buying gold to supplement dollar reserves, which they worried could be at risk if they crossed the U.S. Last year, central banks represented about 20% of gold demand, roughly double from 2021.
Most of all there is Trump’s attempt to reset the U.S.’s relationship with Russia’s Vladimir Putin. While the move may pay dividends if there is ultimately peace in Ukraine, so far Trump’s angling has upset longstanding strategic relationships and raised questions about the strength of U.S. relationships elsewhere around the globe, like Taiwan.
Trump’s governing style means geopolitical tensions and government uncertainty will likely continue—supporting gold prices in the process. Just consider the will-he or won’t-he tariff drama with Canada and Mexico; or the firing and rehiring of government employees.
“Its clear previous alliances are being redrawn” says Nitesh Shah, head of commodities research at WisdomTree. “As a result of that I think we are seeing a lot more demand for gold as a hedge against the previous world order changing.”
The upshot: Bitcoin may or may not be a wise long-term bet. But evidence from 2025 shows it is broadly fueled by investor risk appetites—more like a growth stock than an alternative asset like gold.
Write to Ian Salisbury at ian.salisbury@barrons.com
