As a prelude to our discussion, let’s illustrate the current economic landscape with the fluctuating performances of two valuable assets – gold and Bitcoin (BTC). As the world witnesses a whirlwind of altering market trends, gold seems to bask in the glory of record-breaking highs, leaving Bitcoin grappling in the dark. The growing disparity between the performances of these two assets indicates a discernable drift from digital to traditional modes of investment.
# The Surprising Divergence Between Gold and Bitcoin
Gold currently ripples in the financial market with an impressive per ounce price exceeding $3,036, as it boasts a robust 15% surge since the commencement of the year. On the other side of the spectrum, Bitcoin presents a stark contrast as it suffers an 11% slump, trading at an average price of $83,517. This noticeable discrepancy in returns paints a vivid picture of their diverging fortunes.
## Why Gold Is Outperforming Bitcoin?
Several catalysts are fueling the bullish momentum of gold. Significant inflows into exchange-traded gold funds (ETFs) have proven to be a vital driver, fortified by gold’s long-standing reputation as a safe-haven asset amidst geopolitical volatility.
According to the World Gold Council, February saw massive inflows into globally physically backed gold ETFs, amassing a staggering $9.4 billion – the strongest performance since March 2022. Analysts anticipate sufficient room for fresh inputs into gold-backed ETF investment trusts.
Gold’s rally is further fueled by keen geopolitical tensions. President Donald Trump’s assertive trade policies, including fresh tariffs on Mexico, China, and Canada, have amplified concerns over a potential global economic slowdown. Consequently, investors are gradually gravitating towards gold as a hedge against impending economic instability.
Goldman Sachs’ Co-Head of Global Commodities Research, Daan Struyven, attributes the gold rally to the unnerving uncertainties surrounding US-led tariff policies and rising inflation fears. Struyven points out a notable divergence in commodity markets, with strengthening gold and copper due to tariff-induced pressures, while oil prices decline due to fears of a slowing global economy.
Echoing this sentiment, the escalating trade standoff has ignited fears of increasing consumer prices and broader economic instability. Struyven also notes that central banks have increased gold purchases at rates seven times higher than pre-2022 averages.
Intriguingly, the rally continues to gain momentum despite a decrease in speculative positioning. With ETFs and institutional investors adding nearly 100 tons of gold demand over the past month, the bullish case for gold only strengthens.
## Bitcoin’s Underwhelming Performance and ETF Outflows
Contrarily, Bitcoin has faced hurdles in maintaining its earlier global esteem. Bitcoin ETFs have reported a total outflow of $978 million, culminating in a sum of $5.4 billion over the past five weeks, based on a report by CoinShares.
Despite President Trump’s pro-crypto initiatives, including the execution of an executive order to establish a strategic crypto reserve, Bitcoin remains under consistent pressure. The administration’s unpredictable tariff announcements have shaken broader market confidence, inducing sell-offs in risk-on assets such as Bitcoin and Nasdaq-listed tech stocks.
## Has Bitcoin’s Bull Run Come To A Halt?
Historically, Bitcoin and gold have displayed a seldom correlation. During the banking crisis of 2023, Bitcoin saw an enhanced correlation with gold as speculators sought refuge in store-of-value assets.
However, the paradigm seems to have shifted in 2025. With gold’s rally driving its price 40% higher year-over-year, far eclipsing Bitcoin’s 23% gain, the narrative is undoubtedly changing.
Commodity strategist Mike McGlone too voiced his perspective on these shifting market dynamics. He observed that as both the stock market and Bitcoin rallied amid high U.S. interest rates, the traditional ‘why buy gold’ narrative has been somewhat overlooked.
However, the S&P 500’s first 10% correction since late 2023, combined with Bitcoin’s sharp 25% drop, and gold’s breach of the $3,000 per ounce mark, indicates investors are gradually reverting to safe-haven assets like gold, reinstating its market dominance.
This in-depth analysis of gold and Bitcoin lends valuable insights into their market dynamics, performance trajectories, and the factors influencing them. To further deepen your understanding of these assets, check out the FAQs below:
What factors are driving gold’s strong performance?
Gold’s performance is being driven by significant inflows into gold exchange-traded funds (ETFs), its safe-haven status amidst geopolitical uncertainty, and escalating trade tensions. Central banks increasing their gold purchases due to concerns over the stability of the US dollar and broader geopolitical risks have also contributed to the rally.
Why is Bitcoin’s performance lagging behind gold?
Bitcoin is underperforming due to sustained pressure from unpredictable tariff announcements, which have rattled broader market confidence and prompted sell-offs in risk-on assets, and a decrease in inflows to Bitcoin ETFs.
Are Bitcoin and gold correlated?
Historically, Bitcoin and gold have had a low correlation. However, during periods of economic uncertainty or crisis, such as the banking crisis of 2023, correlation between the two can strengthen as investors seek safe-haven assets.
Is the bull run for Bitcoin over?
With Bitcoin’s sharp price drop and the shifting investor sentiment towards safe-haven assets as evidenced by the rally in gold prices, it is possible that Bitcoin’s bull run may be in jeopardy. However, it is important to consistently monitor market trends and developments for a more accurate assessment.
By stepping away from traditional narratives and exploring the factual depths of these investment assets, we can foster a greater understanding and insight into their potential. Always remember, informed decisions are the cornerstone of successful financial planning.
