Bitcoin Slows, Gold Glows: What’s Driving the Shift in 2025?

We discussed the difference between gold and bitcoin at the beginning of this year. A lot has changed since then!

The first weeks of President Donald Trump’s second administration have produced a remarkable divergence in the performance of two assets often compared by investors seeking alternatives to traditional fiat currencies. While gold has continued its steady ascent to new all-time highs, Bitcoin has experienced a significant correction from its January peak, challenging the narrative that cryptocurrencies would consistently outperform precious metals in times of economic uncertainty.

Gold’s Resilient Performance

Gold exhibited remarkable strength in early 2025, appreciating by about 8% since President Trump’s inauguration on January 20th. This upward trend continues with gold achieving multiple new all-time highs throughout March 2025.

This performance reinforces gold’s enduring status as a reliable value store, particularly during geopolitical and economic uncertainty periods. The precious metal’s positive momentum starkly contrasts its digital competitor, which has struggled to maintain its earlier gains.

Bitcoin’s Substantial Correction

While Bitcoin peaked at $109,000 in January 2025, the leading cryptocurrency has since experienced a steep decline. As of February 25th, 2025, Bitcoin was trading below $90,000—representing a substantial 24% decrease from its January high and marking its lowest since November 2024.

This correction raises important questions about Bitcoin’s volatility and suitability as a “digital gold" during market stress.

Understanding the Divergence

Several key factors explain the contrasting performance of these two assets:

Factors Supporting Gold

Safe-Haven Demand: In a familiar pattern observed throughout monetary history, investors have again gravitated toward gold amid economic and geopolitical uncertainties. This behavior reaffirms gold’s time-tested role as a stable store of value—a position it has maintained for thousands of years across countless economic cycles and political regimes.

Gold’s physical nature, the impossibility of being “hacked" or digitally compromised, zero counterparty risk, and finite supply continue to make it an attractive option for wealth preservation during uncertain times.

Factors Challenging Bitcoin

Market Volatility: Bitcoin has been disproportionately affected by broader market sell-offs and increased volatility in early 2025. While advocates have long promoted Bitcoin as an “uncorrelated asset," its price movements continue to show sensitivity to macroeconomic conditions and general market sentiment.

Security Concerns: A significant theft of $1.5 billion in Ether from the Bybit exchange has reignited concerns about the security vulnerabilities inherent to digital asset platforms. While Bitcoin wasn’t directly compromised, this high-profile security breach has dampened enthusiasm across the cryptocurrency sector and reminded investors of counterparty risks associated with digital asset custody.

Regulatory Uncertainty: The absence of clear regulatory frameworks continues to shadow cryptocurrency markets. This regulatory ambiguity has contributed to investor caution and institutional hesitancy, particularly as various jurisdictions contemplate divergent approaches to cryptocurrency governance.

Implications for Investors

The contrasting performance of gold and Bitcoin in early 2025 offers several insights for investors:

• 1.  Gold’s Monetary Credentials: Gold’s recent performance reinforces its historical role as both a store of value and a genuine form of money. Unlike cryptocurrencies, gold has served as currency for thousands of years across every civilization, from Ancient Egypt to the classical Gold Standard era.
  2.  Physical Scarcity vs. Programmed Scarcity: Gold’s scarcity is governed by the laws of physics and geology, making it impossible to “print" more gold regardless of technological advances. This natural scarcity fundamentally differs from Bitcoin’s programmed scarcity, which remains vulnerable to protocol changes, forks, and the creation of countless alternative cryptocurrencies.
  3.  Global Liquidity and Recognition: Gold maintains unparalleled global liquidity and universal recognition. It can be exchanged for local currency in virtually any country, requires no electricity or internet access to transfer ownership, and crosses borders without reliance on technological infrastructure.

Capital Migration: The Return to Monetary Fundamentals

A particularly noteworthy development in recent weeks has been the observable flow of capital from Bitcoin and other cryptocurrencies directly into physical gold.

The “digital-to-physical" migration represents a fundamental reassessment of what constitutes sound money in an increasingly uncertain economic landscape.

This shift reflects a growing recognition that gold’s 5,000-year history as currency is no accident but rather evidence of its superior monetary properties. Unlike digital tokens, gold demonstrates all the essential characteristics of money:

• 1.  Medium of Exchange: Gold has facilitated trade across cultures, languages, and continents throughout history.
  2.  Unit of Account: Gold’s divisibility allows precise value measurement without degradation.
  3.  Store of Value: Gold has maintained purchasing power over millennia while  countless currencies have failed.
  4.  Portability: Gold offers a high value-to-weight ratio, allowing significant  wealth to be transported physically.
  5.  Durability: Gold does not corrode, degrade, or require maintenance to preserve its value.
  6.  Fungibility: Every ounce of pure gold is identical and interchangeable with any other.
  7.  Non-Counterfeitability: Gold’s unique physical properties make it exceptionally difficult to falsify.

The current movement back to gold represents not merely a tactical asset allocation but a recognition of these fundamental monetary principles that have endured throughout economic history.

Conclusion

As we progress into 2025, the performance gap between gold and Bitcoin is a compelling reminder of precious metals’ enduring relevance in a portfolio. Despite technological innovation and the digital transformation of finance, gold continues to fulfill its historical role as a reliable store of value during uncertain times.

Gold’s recent outperformance against digital assets demonstrates why the physical precious metal has endured centuries of economic upheaval and continues to function as a de facto global currency.

As a monetary metal with no counterparty risk, gold maintains its purchasing power regardless of which governments rise or fall. Central banks worldwide continue to accumulate gold reserves precisely because of their unique status as the only form of money that is simultaneously nobody’s liability. Unlike fiat currencies that can be debased through printing or digital assets vulnerable to technological obsolescence, gold provides a consistent monetary unit that has preserved wealth across generations.