Why Gold Is Winning Over Bitcoin in 2025: Liquidity, Trade, and Trust

Core Insights - Gold has outperformed bitcoin in both price action and investor confidence since the launch of spot bitcoin ETFs in early 2025, raising questions about bitcoin's status as a rival to traditional safe-haven assets [1] - Bitcoin has decreased by approximately 12% since January 2024, while gold has increased by 58% during the same period [2] - Central banks and large asset allocators still prefer gold due to its historical trust and established financial channels, while bitcoin lacks the same level of institutional acceptance [2][3] Performance Comparison - The performance gap between bitcoin and gold has widened, with bitcoin down over 30% since its peak in July, while gold has consistently gained, surpassing $4,100 per ounce [4] - The decline in bitcoin's price is attributed to a liquidity squeeze driven by U.S. fiscal policy rather than a shift in sentiment [4][5] Institutional Adoption - Institutions have not yet fully embraced bitcoin, as evidenced by the lack of significant interest in acquiring wallets for bitcoin transactions [3] - BRICS nations are increasing their gold reserves and utilizing gold for oil trade settlements, a role bitcoin has not yet fulfilled [3] Liquidity Factors - Bitcoin is particularly sensitive to liquidity changes due to its leverage structure, especially in Asia [5] - The U.S. government shutdown led to a significant increase in the Treasury's balance sheet, resulting in reduced liquidity across both traditional and crypto markets, with bitcoin experiencing a more pronounced impact [5]