In theory, bitcoin should thrive in times of uncertainty, as it is solid, censorship-resistant money. In practice, it is becoming the first thing investors sell when the going gets tough.
As geopolitical tensions flared over the past week, following Trump’s threats to slap tariffs on NATO allies in Greenland and speculation about possible military action in the Arctic, markets retreated and volatility soared.
Since January 18, after Trump first threatened tariffs in his bid to acquire Greenland, bitcoin has lost 6.6% of its value, while gold has risen 8.6% to reach new highs near $5,000.
The reason lies in how each asset fits into portfolios during times of stress. Bitcoin’s steady trading, high liquidity, and instant settlement make it an easy asset to unload when investors need to raise cash quickly.
Gold, despite being less accessible, tends to be held rather than sold. This causes Bitcoin to behave more like an “ATM” during periods of panic, undermining its reputation as digital gold, according to NYDIG Global Head of Research Greg Cipolaro.
“In periods of stress and uncertainty, liquidity preference dominates, and this dynamic hurts bitcoin much more than gold,” Cipolaro wrote.
“Despite being liquid for its size, bitcoin remains more volatile and sells off reflexively as leverage is unwound. As a result, in risk-averse environments, it is frequently used to raise cash, reduce VAR and de-risk portfolios, regardless of its long-term narrative, while gold continues to function as a true liquidity sink,” he added.
Big forks don’t help either.
Central banks have been buying gold at record levels, creating strong structural demand. Meanwhile, long-term bitcoin holders are selling according to the NYDIG report.
Onchain data shows that old coins continue to make their way onto exchanges, suggesting a steady flow of sales. This “seller overload” dampens price support. “The opposite dynamic is occurring in gold. Large holders, particularly central banks, continue to accumulate the metal,” Cipolaro added.
Adding to this imbalance is the way in which the markets are valuing risk. The current turbulence is considered episodic, driven by tariffs, political threats and short-term shocks. Gold has long served as a hedge for that kind of uncertainty.
Bitcoin, on the other hand, is better suited to long-term concerns such as fiat currency debasement or sovereign debt crises.
“Gold excels in times of immediate loss of confidence, risk of war and fiduciary degradation that does not imply a total breakdown of the system,” Cipolaro added.
“Bitcoin, by contrast, is better suited to hedge long-term monetary and geopolitical disarray and the slow erosion of confidence that develops over years, not weeks. As long as markets believe the current risks are dangerous but not yet fundamental, gold remains the preferred hedge.”
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