For years, Bitcoin has been called “digital gold” because it was seen as a safe place to store money during times of uncertainty. Many investors believed that Bitcoin, like gold, would hold its value when the economy was unstable. However, recent market trends suggest that gold is making a strong comeback as the preferred safe-haven asset. With gold prices reaching record highs and Bitcoin facing heavy selling, some are questioning whether Bitcoin is losing its role as a store of value.
Gold Reaches Record Highs
Gold has been on a steady rise, nearing $3,000 per ounce for the first time in history. Over the past year, gold prices have increased by almost 50%, making it one of the best-performing assets. This is the biggest yearly gain for gold in over a decade.
The rise in gold prices is largely due to economic uncertainty. Investors are looking for safer places to store their money, and gold has always been a reliable choice. In the past week alone, gold ETFs purchased 52 tonnes of gold, the highest weekly purchase since July 2020.
Gold prices are now up +50% in 12 months. Source: XThis shows that major financial institutions are shifting their focus back to gold as the best hedge against economic instability.
Gold’s recent rise is driven by multiple factors. One of the biggest reasons is the uncertain global economy. Many investors fear a possible recession and rising inflation, so they are moving their money into gold. Another reason is that central banks around the world are increasing their gold reserves, showing that even governments trust gold’s value in uncertain times. Large investment funds and ETFs are also buying gold in record amounts, further pushing its price higher.
Bitcoin Faces a Sharp Decline
While gold is hitting new highs, Bitcoin has been struggling. Since January 20, 2025, Bitcoin and the rest of the crypto market have lost nearly $800 billion in value. One of the biggest reasons for this drop is the growing concern over trade wars.
Historically, Bitcoin was seen as an asset that was separate from traditional financial markets. Many people believed that Bitcoin could act as a hedge, similar to gold. However, recent data suggests that Bitcoin is now behaving more like a high-risk investment rather than a safe haven.
A key moment came on January 20, 2025, when President Trump took office. On that same day, Bitcoin’s price peaked, and the total crypto market cap began to fall. In just five weeks, the total market cap of cryptocurrencies dropped from $3.7 trillion to $2.8 trillion.
Total crypto market cap has fallen from $3.7 trillion to $2.8 trillion in 5 weeks. Source: XThis suggests that investors are no longer using Bitcoin as a safe store of value. Instead, they are selling their crypto holdings during uncertain times and shifting their money elsewhere, especially into gold.
Bitcoin ETF Outflows and Liquidity Problems
Another reason for Bitcoin’s decline is the massive selling pressure coming from Bitcoin ETFs. Bitcoin ETFs, which allow investors to buy Bitcoin through traditional stock markets, have seen record withdrawals in recent days.
On Feb. 27, Bitcoin ETFs recorded a $1 billion outflow, which was the biggest single-day withdrawal in history. Over the past six days, a total of $2.1 billion has been withdrawn from Bitcoin ETFs. Most of these withdrawals have come from retail investors, who seem to be losing confidence in Bitcoin.
The problem with large ETF withdrawals is that they reduce market liquidity. Liquidity refers to how easily Bitcoin can be bought and sold without affecting its price too much. When liquidity drops, Bitcoin’s price becomes more volatile. During major ETF outflows, Bitcoin’s price can drop by more than $5,000 in just minutes, making it an unpredictable asset.
Bitcoin and Gold Are No Longer Moving Together
One of the biggest changes in financial markets is how Bitcoin and gold are behaving. In the past, Bitcoin and gold were seen as substitutes, meaning that they moved in similar directions. When gold went up, Bitcoin usually went up as well.
That is no longer the case. Recent data shows that gold is outperforming Bitcoin, especially during times of uncertainty. While gold has been rising, Bitcoin has been falling, showing that investors no longer see Bitcoin as a reliable hedge.
Bitcoin and Gold are moving in opposite directions. Source: XBitcoin is now behaving more like a technology stock rather than a safe-haven asset. Bitcoin’s price has been closely following the Nasdaq 100 and the S&P 500. In 2024, Bitcoin’s price had a 0.88 correlation with the S&P 500, meaning that Bitcoin moved almost exactly like the stock market 88% of the time.
This is very different from what investors expected. Many believed Bitcoin would act as a hedge against inflation and financial crises, but in reality, it is acting more like a risky stock.
Is Gold Winning the Battle Against Bitcoin?
Bitcoin is still a major financial asset, but the current trends suggest that gold is regaining its place as the ultimate store of value. Gold is reaching new all-time highs, while Bitcoin is struggling with liquidity issues and heavy selling pressure.
The market is shifting. Investors who used to buy Bitcoin as a hedge are now turning back to gold. If Bitcoin is to reclaim its status as “digital gold,” it will need to prove that it can hold its value during uncertain times. But for now, gold remains the number one safe-haven asset.
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