Gold Reaches New Highs, Can Bitcoin Outperform in Economic Uncertainty?
Recently, gold has repeatedly set new highs, while Bitcoin appears to be struggling. In the context of economic uncertainty this year, can BTC outperform gold?
(Background: Gold breaks through the historic high of $3070! Goldman Sachs optimistic for another 10% rise: Two major entry points.)
(Further context: Bitcoin’s “Golden Cross” in the housing market is here! Boldly predicting a further 20% drop in housing prices: The eighth wave of housing regulation is inevitable in 2025, occurring in two phases.)
Bitcoin: Digital Gold or Tech Stock?
Cryptocurrency investors have long referred to Bitcoin as “digital gold.” If that is the case, then Bitcoin should be able to hedge against the market volatility and economic uncertainty currently experienced by investors, just like gold.
But let’s examine the current situation. Gold prices have just surpassed $3000, setting a historic high and have risen 15% year-to-date. In contrast, Bitcoin has dropped nearly 20% from its historic high of $109,000 in January.
Gold appears to be on the rise, while Bitcoin—at least at this moment—seems to be declining. So, which is the better investment option now? The answer may not be as obvious as you think.
Key Considerations
One key factor to remember is the correlation between Bitcoin and the stock market. For much of its history, Bitcoin has been completely uncorrelated with the stock market, which is one reason it is so attractive to many investors. In 2024, WisdomTree conducted a comprehensive study on Bitcoin and found that Bitcoin has almost no correlation with the stock market, except for some brief periods since 2012.
In many ways, this lack of correlation makes Bitcoin the ultimate portfolio diversification tool. Not only is Bitcoin uncorrelated with the stock market—it is uncorrelated with all major asset classes. It seems to be unique, and Wall Street also recognizes Bitcoin as a potential tool for hedging against economic uncertainty and market volatility.
However, in 2025, some very strange things are happening: Bitcoin is increasingly resembling tech stocks. There is growing statistical evidence to support this viewpoint.
In March, the UK’s major bank Standard Chartered carefully examined the correlation between Bitcoin and the stock market, finding that Bitcoin’s correlation with the Nasdaq is now at 0.5, having reached as high as 0.8 earlier this year. Meanwhile, Bitcoin’s correlation with gold appears to have diminished, currently standing at only 0.2, and even dropping to zero earlier this year.
These digital changes may seem minor, but they are significant in the eyes of investors. This indicates that Bitcoin may no longer be a safe-haven asset. Of course, correlations can change over time, but Bitcoin currently moves in tandem with tech stocks. Simply put, buying Bitcoin now is akin to purchasing a volatile tech stock. If tech stocks decline, Bitcoin will likely decline too; if tech stocks rise, Bitcoin will likely rise as well.
Bitcoin vs. Gold
Any assertion that Bitcoin is digital gold now seems fanciful. If Bitcoin is even uncorrelated with gold, how could it possibly be digital gold? If Bitcoin is a tool to hedge against economic uncertainty, why is its price still falling?
Where is the Economy Heading in 2025?
It is understandable that many Bitcoin investors (like tech stock investors) have begun to obsess over the latest U.S. macroeconomic data. All this data—inflation reports, consumer confidence reports, GDP reports—is crucial for understanding Bitcoin’s future trajectory.
The potential impact of widespread tariffs remains unknown. If these tariffs push the U.S. economy into recession while simultaneously causing prices to rise due to tariffs, the situation could become dire. One could ask ChatGPT what happened when stagflation became the new economic buzzword in the 1970s.
According to conventional wisdom, if one believes the economy will enter a recession due to tariffs, one should buy gold; conversely, if one believes the economy will rebound strongly due to “America First” tariff policies, one should buy Bitcoin.
Will Gold Truly Outperform Bitcoin in 2025?
According to the latest economic data, Goldman Sachs predicts that by the end of 2025, gold prices could reach $3300. This represents a 10% increase from the current price of $3000.
But guess what? Bitcoin can rise 10% within a 24-hour trading period. Achieving such performance over the next nine months seems not too difficult for Bitcoin, which has a history of triple-digit annual returns.
Thus, while gold may currently appear to be the obvious, no-brainer investment choice, and Bitcoin increasingly resembles tech stocks, I still choose Bitcoin. Ultimately, I believe Bitcoin will outperform gold by 2025.
