In theory, bitcoin should thrive in times of uncertainty, as it is sound money that is censorship-resistant. In practice, it’s becoming the first thing investors sell when push comes to shove.
As geopolitical tensions flared over the past week, following Trump’s threats of tariffs against NATO allies over Greenland and speculation about potential military action in the Arctic, markets retreated and volatility rose.
Since January 18, after Trump first threatened tariffs in his push to buy Greenland, bitcoin has lost 6.6% of its value, while gold has risen 8.6% to new highs near $5,000.
The reason lies in how each asset fits into portfolios in times of stress. Bitcoin’s always-on trading, deep liquidity and instant settlement make it an easy asset to pick up when investors need to raise cash quickly.
Gold, despite being less available, tends to be held rather than sold. This makes bitcoin behave more like an “ATM” during periods of panic, undermining its reputation as digital gold, according to NYDIG’s global head of research, Greg Cipolaro.
“During periods of stress and uncertainty, liquidity preference dominates, and this dynamic hurts bitcoin far more than gold,” Cipolaro wrote.
“Despite being liquid for its size, bitcoin remains more volatile and is sold reflexively as leverage unwinds. As a result, in risk-off environments, it is often used to raise cash, reduce VAR and de-risk portfolios regardless of its long-term narrative, while gold continues to act as a true liquidity sink,” he added.
Big holders don’t help either.
Central banks have been buying gold at record levels, creating strong structural demand. Meanwhile, long-term bitcoin holders are selling, according to NYDIG’s report.
Onchain data shows that vintage coins continue to move towards exchanges, suggesting a steady stream of sales. This “seller’s overhang” dampens the price support. “The opposite dynamic is playing out in gold. Large holders, especially central banks, continue to accumulate the metal,” Cipolaro added.
Adding to the discrepancy is how markets price risk. The current turbulence is seen as episodic, driven by tariffs, political threats and short-term shocks. Gold has long served as a hedge against that kind of uncertainty.
Bitcoin, on the other hand, is better suited to long-term concerns, such as fiat deterioration or sovereign debt crises.
“Gold excels in moments of immediate loss of confidence, risk of war and fiat breakdown that do not involve a complete system breakdown,” Cipolaro added.
“Bitcoin, on the other hand, is better suited to hedge against long-term monetary and geopolitical disorder and slow-moving confidence erosion that unfolds over years, not weeks. As long as markets believe current risks are dangerous but not yet fundamental, gold remains the hedge of choice.”
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