Why gold is rising faster than bitcoin

In the opening weeks of 2025, gold set a new all-time high, nearing $2,950 per troy ounce. The leap was a year in the making: the price had been edging up throughout 2024, largely overlooked by media fixated on bitcoin, which is striving to take the precious metal’s place in investment portfolios.

What is driving physical gold—and can digital gold compete? Oleg Cash Coin examines.

A “safe harbour” in minimal proportions

2025 opened with a sharp rally in gold, which outpaced nearly every asset class, rising more than 10%. One reason for the rise was aggressive buying of the metal throughout 2024, when demand reached a record 4,974 tonnes. As noted in a February report by the World Gold Council:

“Central banks continued to buy gold at a dizzying pace: purchases exceeded 1,000 tonnes for a third consecutive year, and in Q4 accelerated sharply to 333 tonnes.”

The catalyst was likely the economic wars that erupted after US president Donald Trump announced new trade tariffs for a host of countries. The topic quickly dominated the news cycle. As a result, the “primary” metal’s year-to-date return jumped, leaving behind both bitcoin and traditional risk assets such as the S&P 500, which were up 5% and 3% respectively.

All this despite bitcoin enjoying perhaps the friendliest regulatory backdrop in its history. In recent months America’s political and economic elites have publicly called BTC and other cryptocurrencies the best hedging instrument, a “safe haven”. Yet it is physical, not digital, gold that has been advancing decisively this year, outpacing the market.

“I really do not believe regulation affects the expansion of blockchain. I think it depends on liquidity and transparency. And the expansion process itself is no different from many years ago, when we built the mortgage and high-yield credit markets,” — said BlackRock chief Larry Fink during the earnings call for the third quarter of 2024.

A month earlier, analysts at the investment firm had drawn attention to bitcoin’s high volatility and its impact on the Sharpe ratio in portfolios using the traditional 60/40 mix. They recommended holding BTC only in minimal proportions.

Thus Fink and his team underscored that bitcoin is useful chiefly as a partial diversifier, combining features of gold, fiat currencies and risk assets such as equities. That is visible in the chart below, which illustrates long-term correlations between bitcoin, gold, the S&P 500 and US Treasury yields.

What gold is telling us

In theory, a gold rally decoupled from other markets points to serious economic anxieties. Some analyst notes view the surge in demand for the precious metal as a sign of impending stagflation—that is, falling GDP alongside accelerating inflation and rising unemployment.

The last such episode in the United States came after the abandonment of the gold standard in 1971, when rising commodity prices led to a deep crisis.

Step away from macroeconomics and look at gold’s speculative appeal, and you will notice how little has been said about it in recent years—especially compared with the breathless talk about the booming stock market, cryptocurrencies and the tech sector. Who needs paltry tens of percent when chatbots can earn you hundreds?

Analysts at Katusa Research compiled a chart showing that there is no correlation between the rise in gold prices and media coverage. On February 1st, with the price at $2,800 per ounce, the metal’s “popularity” was near a five-year low.

“Despite gold’s 70% rise since 2020, its mentions in the news are at a historically low level. The rapid rise of the precious metal appears to have gone unnoticed,” the experts say.

As noted by ByteTree founder Charlie Morris, institutional investors are ignoring this opportunity because they remain very confident in securities. The same goes for gold-mining companies, whose valuations lag far behind both the stock market and the metal itself.

From bitcoin’s vantage point

It is tempting to flatter crypto pride and agree that bitcoin can replace gold. Yet that is unlikely in the coming years. Do not forget that gold has thousands of years of experience as a defensive asset. Bitcoin has existed for less than two decades, and is still seen by public and state institutions as an experiment.

There is, however, one function the first cryptocurrency can perform on a par with gold—long-term savings. Even if the market accepts no other use cases for bitcoin, that alone already works.

Look at gold’s price history in recent decades and you see long cycles of appreciation that point to its primacy over other markets.

Although there was a sharp drawdown by the late 1990s, the trend towards gold’s dominance returned—first against cash, then government bonds, and now there is a tussle with equities. An ordinary investor may not see attractive upside here—such horizons are typically the purview of states. But over the long term, gold is an excellent instrument that can protect capital through crises of any severity.

That is very similar to what happens with bitcoin. In some cycles, certain altcoins meaningfully outpace the original cryptocurrency, but the long-term trend makes clear that BTC regains leadership.

There is no doubt that bitcoin already plays the role of digital gold within the cryptocurrency market. The horizons of physical gold, however, are incomparably wider—and for now the first cryptocurrency can scarcely claim a similar place in the global financial system.