By Dominic Basulto
Compiled by: Vernacular Blockchain
Cryptocurrency investors have long referred to Bitcoin as “digital gold.” If that’s true, then Bitcoin, like gold, should be able to hedge against the market volatility and economic uncertainty that investors are currently experiencing.
But let's look at where things are now. Gold prices have just surpassed $3,000, a new all-time high, and are up 15% so far this year. In contrast, Bitcoin is down nearly 20% from its all-time high of $109,000 in January.
Gold appears to be on the rise, while Bitcoin — at least at the current moment — appears to be on the decline. So which one is the better investment option right now? The answer may not be as obvious as you think.
1. Bitcoin: Digital gold or tech stock?
A key factor to keep in mind is Bitcoin's correlation with the stock market. For most of its history, Bitcoin was completely uncorrelated with the stock market, which is what makes it so attractive to many investors. In 2024, WisdomTree conducted a comprehensive study on Bitcoin and found that Bitcoin had almost no correlation with the stock market, except for a few brief periods since 2012.
In many ways, this non-correlation makes Bitcoin the ultimate portfolio diversifier. It’s not just that Bitcoin is uncorrelated with the stock market — it’s uncorrelated with all major asset classes. It appears to be unique, and Wall Street has embraced Bitcoin as a potential hedge against economic uncertainty and market volatility.
But in 2025, something very strange is happening: Bitcoin is increasingly behaving like a tech stock. And there is growing statistical evidence to support this view.
In March, Standard Chartered, a large British bank, took a closer look at Bitcoin's correlation with the stock market and found that Bitcoin's correlation with the Nasdaq is now 0.5, having been as high as 0.8 earlier this year. Meanwhile, Bitcoin's correlation with gold appears to have been lost, now at just 0.2, having even been zero earlier this year.
These numerical changes may seem small, but they are significant in the eyes of investors. This shows that Bitcoin may no longer be a safe haven asset. Of course, correlations will change over time, but Bitcoin is now highly aligned with the movements of technology stocks. In simple terms, buying Bitcoin now is like buying a volatile technology stock. If technology stocks fall, Bitcoin will also fall; if technology stocks rise, Bitcoin will also rise.
2. Gold Bitcoin
Image source: Getty Images
Any suggestion that Bitcoin is digital gold now looks like wishful thinking. How can Bitcoin be digital gold if it is not even correlated to gold? If Bitcoin is a hedge against economic uncertainty, why is its price still falling?
3. Where will the economy be headed in 2025?
Understandably, many Bitcoin investors (like tech stock investors) have become obsessed with the latest U.S. macroeconomic data. All of this data—inflation reports, consumer confidence reports, gross domestic product (GDP) reports—is crucial to understanding where Bitcoin is headed next.
The potential impact of large-scale across-the-board tariffs remains unknown. If these tariffs push the U.S. economy into a recession, coupled with higher prices due to the tariffs, things could get really bad. Just ask ChatGPT what happened in the 1970s when stagflation became the new economic buzzword.
Conventional wisdom dictates that if you think the economy will go into recession due to tariffs, you should buy gold, while if you think the economy will rebound strongly due to an “America First” tariff policy, you should buy Bitcoin.
4. Will gold really outperform Bitcoin in 2025?
Based on the latest economic data, Goldman Sachs predicts that gold prices could reach $3,300 by the end of 2025. This would be a 10% increase from the current price of $3,000.
But guess what? Bitcoin was able to gain 10% in a 24-hour trading period. Over the next nine months, this performance doesn’t seem difficult for Bitcoin, which has a history of triple-digit annual returns.
So even though gold looks like the obvious, no-brainer investment choice right now, and Bitcoin is looking more and more like a tech stock, I’m still picking Bitcoin. The bottom line is, I believe Bitcoin will outperform gold in 2025.
