Why Is Bitcoin Selling Quickly When It Should Be a Safe Haven

Over the past weeks of geopolitical tensions, Bitcoin has shown a state that many in the industry did not expect. While gold has risen by 8.6% toward new record highs near $5,000, the largest cryptocurrency has dropped 6.6% in value. This scenario signals an important truth: Bitcoin is not thriving as a true safe haven asset, but rather acting as a quick-turned cash when markets need emergency liquidity.

The paradox is clear. In theory, Bitcoin should thrive during times of uncertainty because it is a decentralized digital asset resistant to censorship and government control. In practice, exactly the opposite is happening. When market stress hits, investors quickly sell their Bitcoin holdings to raise cash, leaving the asset to behave more like an automated teller machine rather than increasing as a hedge.

Bitcoin’s Rapid Liquidity Is Key to the Divergence

The main reason for this dynamic lies in how each asset is structured within portfolios during stress. Bitcoin has continuous trading, deep liquidity pools, and instant settlement capabilities, making it an ideal candidate for rapid cash-raising operations. Gold, on the other hand, is less liquid and more often built rather than sold by its holders.

According to Greg Cipolaro, Global Head of Research at NYDIG, this dynamic is fundamental to understanding why Bitcoin responds differently than gold during market stress. “Under stress and uncertainty, the preference for liquidity prevails. Bitcoin, despite its liquidity for its size, continues to become more volatile and is chosen as a cash source because leverage is no longer used,” Cipolaro said.

This creates a peculiar situation where investors use Bitcoin as an “ATM”—quick access to liquidity—rather than a long-term store of value. While gold remains a core component of portfolios as a true confidence asset, Bitcoin is often used to reduce portfolio risk, VAR exposure, and provide immediate cash, regardless of its long-term narrative as digital gold.

Why Gold Is More Stable in the Short Term

The structural demand for gold offers a clue as to why it holds up better during stress. Central banks worldwide are buying gold at record levels, creating a strong and consistent demand floor. This situation provides price support independent of intra-day market sentiment.

In Bitcoin, the scenario is the inverse. Blockchain analysis data shows that long-term holders are actively selling, with vintage coins continuously moving to exchanges. This “seller overhang” contributes to downward pressure on prices, especially observable during times of market uncertainty.

“The opposite is happening with gold. Large accumulators, especially central banks, continue to stockpile the metal,” Cipolaro added. This distinction is critical: while institutional demand supports gold, Bitcoin faces institutional selling pressure.

The Difference Between Short-Term and Long-Term Risks

Another aspect of the puzzle revolves around how markets price different types of risks. Current geopolitical tensions—from Trump’s tariff threats to military posturing in the Arctic—are seen by markets as episodic rather than systemic. This short-term shock is historically addressed by gold, which has long been the preferred hedge for immediate confidence loss and war risk.

Bitcoin, conversely, is more suited for long-term macro risks: ongoing fiat currency debasement, sovereign debt crises, or systemic financial collapse. “Gold thrives in moments of immediate confidence loss, war risk, and fiat concerns that do not require a full system breakdown,” Cipolaro said. “Bitcoin is more designed for insurance against long-term financial and geopolitical instability and the gradual erosion of trust that occurs over years, not weeks.”

Since markets do not yet perceive current risks as foundational, gold remains the preferred asset. Bitcoin is more appropriate for investors preparing for larger, slower-moving catastrophic events.

The Role of US Dollar Dynamics

An additional layer of complexity comes from US dollar behavior. Bitcoin, in an unusual way, does not rise alongside dollar weakness— a pattern suggesting it does not act as a USD hedge in the current environment.

JPMorgan strategists point out that the current dollar weakness is driven by temporary flows and sentiment shifts, not by fundamental economic or monetary policy changes. They expect the currency to regain strength as the US economy grows, which redefines the risk landscape. Since markets do not perceive the USD decline as a long-term macro shift, Bitcoin is increasingly traded as a liquidity-sensitive risk asset rather than a USD hedge.

The result benefits gold and emerging market assets as diversification tools but leaves Bitcoin in an awkward position.

Forward Outlook for Both Assets

As geopolitical tensions and market volatility continue, the divergence between Bitcoin and gold is likely to persist. For investors seeking short-term protection against immediate shocks, gold remains the more reliable bumper. Deep central bank demand and lower liquidity premiums provide a more stable price foundation.

For Bitcoin, the real value proposition remains in the long-term macro thesis: insurance against systemic financial breakdown or progressive loss of trust in fiat systems. But in the short term, the asset is vulnerable to being used as a liquidity source when investors need cash— a dynamic that undermines its short-term safety reputation.

The key takeaway is this: Bitcoin and gold are not interchangeable diversifiers. Gold remains the more appropriate instrument for immediate crisis hedging, while Bitcoin is more effective for hedging long-term macro risks that develop over years or decades. Understanding this distinction is crucial for sophisticated portfolio construction in an increasingly volatile world.