Both Are for Hedging Risks, Why Can't Bitcoin Outperform Gold?

marsbitPublished on 2026-01-26Last updated on 2026-01-26

Abstract

The article explores why Bitcoin has underperformed gold as a safe-haven asset during recent geopolitical tensions, such as those triggered by Trump’s tariff threats and Arctic instability. While gold rose 8.6%, Bitcoin fell 6.6%, challenging its "digital gold" narrative. According to NYDIG research, Bitcoin’s high liquidity and 24/7 trading make it function like an "ATM" during crises—easily sold for quick cash—rather than a store of value. In contrast, gold is held rather than liquidated, supported by strong structural demand from central banks. The analysis concludes that gold remains the preferred hedge for short-term, episodic risks, while Bitcoin is better suited for long-term concerns like fiat debasement or systemic financial crises.

Author:Francisco Rodrigues

Compiled by: Deep Tide TechFlow

Deep Tide Introduction:

Bitcoin has long been touted as "digital gold," but this narrative is facing a severe challenge amid recent market volatility triggered by Trump's tariff policies and geopolitical tensions in the Arctic. While gold prices have steadily climbed and approached the $5,000 mark, Bitcoin has performed sluggishly.

Research from NYDIG (New York Digital Group) points out that Bitcoin's high liquidity and 24/7 trading characteristics make it an "ATM" for investors to exchange for cash during panic periods, rather than a safe haven. This article delves into why Bitcoin is losing to traditional gold as a hedge against short-term policy shocks.

Full text as follows:

During uncertain times, Bitcoin behaves more like an "ATM machine," with investors quickly selling it to raise cash.

Key Points:

Hedging Disconnect: Amid recent geopolitical tensions, Bitcoin fell by 6.6%, while gold rose by 8.6%. This strongly demonstrates Bitcoin's continued vulnerability during periods of market stress.
"ATM" Effect: In uncertain times, Bitcoin acts more like an "automated teller machine (ATM)"—investors rapidly sell it to raise cash quickly, contradicting its reputation as a "stable digital asset."
Misalignment of Hedging Properties: Gold remains the preferred hedge against short-term risks, while Bitcoin is better suited for long-term monetary risks and geopolitical uncertainties spanning years rather than weeks.

In theory, Bitcoin should shine during uncertain times due to its censorship-resistant, hard-money properties. In practice, however, it has become the first asset investors sell when things get tense.

Over the past week, as geopolitical tensions escalated—following Trump's threats to impose tariffs on NATO allies over the Greenland acquisition and speculation about potential military action in the Arctic—markets retreated, and volatility spiked sharply.

Since January 18, when Trump first threatened tariffs in his push to acquire Greenland, Bitcoin has depreciated by 6.6%, while gold has risen by 8.6%, hitting new highs near $5,000.

The reason lies in how each asset fits into investment portfolios during stressful periods. Bitcoin's round-the-clock trading, deep liquidity, and instant settlement features make it the easiest asset for investors to reduce when they need to raise cash quickly.

According to Greg Cipolaro, Global Head of Research at NYDIG, gold, though less accessible, tends to be held rather than sold. This makes Bitcoin behave more like an "ATM machine" during panic periods, undermining its reputation as "digital gold."

"During periods of stress and uncertainty, liquidity preference dominates, and this dynamic hurts Bitcoin far more than gold," Cipolaro wrote.

"Despite its liquidity relative to its size, Bitcoin maintains higher volatility and is reflexively sold off as leverage is liquidated. Thus, in risk-off environments, regardless of its long-term narrative, it is often used to raise cash, reduce value at risk (VAR), and de-risk portfolios, while gold continues to serve as a true liquidity sink," he added.

The behavior of large holders (whales) doesn't help either.

Central banks have been buying gold at record levels, creating strong structural demand. Meanwhile, according to NYDIG's report, long-term Bitcoin holders are selling.

On-chain data shows that vintage coins (tokens that have not moved for a long time) are consistently flowing to exchanges, indicating a steady stream of selling pressure. This "seller overhang" suppresses price support. Cipolaro added, "The gold space exhibits the exact opposite dynamic. Large holders, especially central banks, continue to hoard the metal."

Another reason for this mismatch is how the market prices risks. The current turmoil is seen as episodic, driven by tariffs, policy threats, and short-term shocks. Gold has long been regarded as a hedge against such uncertainties.

In contrast, Bitcoin is better suited for addressing long-term concerns, such as fiat debasement or sovereign debt crises.

"Gold excels during moments of immediate loss of confidence, war risks, and fiat debasement that do not involve a complete systemic collapse," Cipolaro added.

"In contrast, Bitcoin is better suited for hedging long-term monetary and geopolitical disorder, as well as the slow erosion of trust over years rather than weeks. As long as the market perceives the current risks as dangerous but not yet fundamental, gold remains the preferred safe-haven asset."

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