If It’s All About Risk Avoidance, Why Can’t Bitcoin Outperform Gold?
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If It’s All About Risk Avoidance, Why Can’t Bitcoin Outperform Gold?
Bitcoin is better suited to address long-term monetary risks and geopolitical uncertainties spanning years rather than weeks.
Navigating Web3 tides with focused insightsTranslated by: TechFlow
TechFlow Insight:
Bitcoin has long been touted as “digital gold,” but this narrative is now facing a severe challenge amid recent market volatility triggered by Trump’s tariff policies and geopolitical tensions in the Arctic. While gold prices have steadily climbed toward the $5,000 mark, bitcoin has underperformed.
According to research from NYDIG (New York Digital Investment Group), bitcoin’s extremely high liquidity and 24/7 tradability cause it to function as an “ATM” for investors seeking cash during periods of panic—not as a safe haven. This article delves into why bitcoin is currently falling short of gold in its safe-haven properties amid short-term policy shocks.
Full text below:
In times of uncertainty, bitcoin behaves more like an “ATM”—investors quickly sell it to raise cash.
Key Takeaways:
- Safe-haven disconnect: Amid recent geopolitical tensions, bitcoin fell 6.6%, while gold rose 8.6%. This starkly demonstrates bitcoin’s continued vulnerability during periods of market stress.
- The “ATM effect”: In uncertain times, bitcoin acts more like an “automated teller machine (ATM)”—investors rapidly sell it to raise cash quickly, contradicting its reputation as a stable digital asset.
- Misaligned hedging properties: Gold remains the preferred hedge against short-term risks, whereas bitcoin is better suited to hedge longer-term monetary and geopolitical uncertainties—spanning years, not weeks.
In theory, bitcoin should shine during uncertain times, given its censorship-resistant, hard-currency attributes. In practice, however, it has become the first asset investors sell when conditions turn urgent.
Over the past week, markets retreated and volatility spiked amid escalating geopolitical tensions—including Trump’s threat to impose tariffs on NATO allies over Greenland acquisition talks and speculation about potential military action in the Arctic.
Since Trump first threatened tariffs on January 18—during his push to acquire Greenland—bitcoin has declined 6.6%, while gold has risen 8.6%, hitting a new high near $5,000.
The reason lies in how each asset fits into portfolios during stress. Bitcoin’s 24/7 trading, deep liquidity, and instant settlement make it the most easily liquidated asset for investors needing quick cash.
“Gold, though less accessible, is typically held rather than sold,” said Greg Cipolaro, NYDIG’s Global Head of Research. “This makes bitcoin behave more like an ‘ATM’ during panics—undermining its reputation as ‘digital gold.’”
“During stress and uncertainty, liquidity preference dominates—and this dynamic harms bitcoin far more than gold,” Cipolaro wrote.
“Despite its liquidity at scale, bitcoin retains higher volatility and is reflexively sold off amid leveraged liquidations. Thus, in risk-off environments, it is frequently used to raise cash, reduce value-at-risk (VAR), and de-risk portfolios—regardless of its long-term narrative—while gold continues to serve as genuine liquidity ballast,” he added.
The behavior of large holders (“whales”) isn’t helping either.
Central banks have been buying gold at record levels, creating strong structural demand. Meanwhile, according to NYDIG’s report, long-term bitcoin holders are selling.
Onchain data shows vintage coins—those that have remained unmoved for extended periods—are flowing steadily to exchanges, indicating persistent selling pressure. This “seller overhang” suppresses price support. Cipolaro added: “The gold space exhibits the opposite dynamic: Large holders—especially central banks—continue accumulating the metal.”
Another factor behind this mismatch is how markets price risk. Current turbulence is viewed as episodic—driven by tariffs, policy threats, and short-term shocks. Gold has long served as the go-to hedge against such uncertainty.
In contrast, bitcoin is better suited to address longer-term concerns—such as fiat debasement or sovereign debt crises.
“Gold excels during moments of immediate loss of confidence, war risk, and fiat depreciation that falls short of full systemic collapse,” Cipolaro added.
“By contrast, bitcoin is better suited to hedge prolonged monetary and geopolitical disorder—as well as slow erosion of trust over years, not weeks. So long as markets perceive current risks as dangerous but not existential, gold remains the preferred safe-haven asset.”
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