Bitcoin that lost its growth opportunity, and why gold becomes a refuge during short-term crises

Is Bitcoin truly the ‘Digital Gold’? Recently, during a period of geopolitical tension, Bitcoin failed to thrive and instead plummeted by 6.6%, while gold rose by 8.6%, surpassing its historical high of $5,500 per ounce. Currently, Bitcoin’s 24-hour volatility stands at -3.73%. The phenomenon where Bitcoin, which should theoretically be a resilient and sound currency against censorship, struggles to prosper during uncertain times reveals deeper structural issues beyond mere market weakness.

Geopolitical Shock: stark contrast in asset responses

Since January 18, when President Trump threatened tariffs to push for the acquisition of Greenland, the market reached an unexpected turning point. The threat of tariffs on NATO allies and potential military actions in the Arctic triggered a surge in geopolitical tensions, leading to a spike in investors’ portfolio rebalancing demands.

In this process, the responses of the two assets diverged sharply. Gold, as a traditional safe haven for short-term risk, experienced strong investor demand, while Bitcoin became the ‘first choice’ for liquidity-constrained investors under stress. This outcome highlights the fundamental difference in market trust assigned to each asset.

‘Cash-in’ Bitcoin in a liquidity crisis: its fate

Greg Cipolaro, Head of Global Research at NYDIG, provided a clear analysis of this phenomenon. Bitcoin’s continuous trading, deep liquidity, and instant settlement system enable investors to sell quickly and access cash faster than any other asset when needed. Conversely, gold, despite limited accessibility, is primarily held by long-term investors.

Cipolaro explained, “During times of stress and uncertainty, liquidity preference dominates, and this dynamic hits Bitcoin much harder than gold.” Despite its size, Bitcoin remains highly liquid but is still volatile and reflexively liquidated in risk-averse phases. Investors use Bitcoin as a ‘cash-in’ tool to reduce portfolio risk, which undermines its role as a genuine digital asset.

He added, “Bitcoin remains volatile and is reflexively sold when leverage unwinds. As a result, in risk-averse environments, it is often used to raise cash and lower portfolio risk regardless of long-term narratives, whereas gold continues to serve as a true liquidity absorber.”

Central banks buying gold vs large holders selling Bitcoin

The flow of large capital also determines the fate of these assets. While central banks are purchasing gold at record levels, creating strong structural demand, the Bitcoin market shows the opposite trend.

According to NYDIG reports, long-term Bitcoin holders are selling, and on-chain data indicates that older coins are continuously moving to exchanges. This persistent ‘sell-overflow’ weakens price support. Conversely, in the gold market, the opposite is happening: large holders, especially central banks, continue accumulating gold, supporting the structural base that has helped push prices to $5,500.

Psychological indicators like the JM Bullion Fear & Greed Index also reflect this. They signal extreme optimism toward gold, while similar crypto indicators remain in fear territory. Despite the ‘real asset’ narrative, investors are trading Bitcoin as a high-beta risk asset, preferring physical gold and silver for store of value.

Short-term risk vs long-term chaos: market diverges

Currently, volatility is perceived as driven by tariffs, policy threats, and short-term shocks. Gold has long served as a hedge against such short-term uncertainties, making it a natural choice for investors. Bitcoin, on the other hand, is more suited to deeper issues—such as fiat currency devaluation or sovereign debt crises—related to long-term geopolitical chaos.

Cipolaro clarified this distinction: “Gold excels in scenarios of immediate loss of trust, war risks, and systemic collapse without involving nominal currency devaluation,” and “Bitcoin is better suited as a hedge against currency and geopolitical turmoil that unfold over years or decades, and the slow erosion of trust.”

The current way markets assess risk constrains Bitcoin’s opportunity to thrive. As long as the market perceives current risks as serious but not yet fundamentally destabilizing, gold remains the preferred hedge. For Bitcoin to regain its prosperity, the market’s uncertainty must evolve from transient policy shocks to structural trust erosion.