Recent market trends reveal a significant divergence in the performance of gold and Bitcoin, with gold demonstrating a stark advantage in both price stability and investment confidence. As of January 2024, gold has surged by an impressive 58%, peaking at a record $4,381 per ounce in October before settling around $4,216. In contrast, Bitcoin has struggled, experiencing a decline of approximately 12% year-to-date and a notable fall of 21% in November alone, bringing its price down into the low $80,000s before a partial recovery to about $91,000.
The compelling dynamics between these two assets are underscored by the growing interest from central banks and institutional investors in gold, contrasting with the ongoing skepticism surrounding Bitcoin as a reliable reserve asset. The World Gold Council’s recent survey indicated a record 95% of central banks anticipate an increase in global gold reserves over the next 12 months, a substantial increase from the 81% reported in 2024. Additionally, 76% of respondents believe gold will constitute a greater portion of total reserves within five years. This proactive approach by central banks, which have bought over 1,000 tonnes of gold annually for the past three years, signals a clear shift towards bullion, especially among emerging markets.
The central role of gold in risk management was highlighted by Russia’s central bank, which noted that emerging-market reserve managers are increasingly diversifying into gold amidst geopolitical tensions surrounding the G7’s discussions on frozen Russian assets. Unlike Bitcoin, gold offers a tangible asset that can be secured in vaults, providing a degree of safety and stability that institutional players value highly.
Adding an intriguing layer to the gold narrative, Tether—known for issuing the world’s largest stablecoin—has accumulated 116 tonnes of gold, which positions it alongside national reserves like those of South Korea and Greece. Jefferies reported that Tether’s purchases during the third quarter accounted for 2% of global gold demand, representing nearly 12% of central bank purchases in that period.
Major financial institutions have reinforced the sentiment favoring gold, with projections from Goldman Sachs estimating gold could reach $4,900 by late 2026, while UBS sees potential for it to hit $4,500 by mid-year. Deutsche Bank is also optimistic, forecasting an average price of $4,450 for 2026.
In contrast, Bitcoin’s infrastructure limitations and volatility have made it less appealing to traditional institutional investors. Mark Connors, founder of bitcoin advisory Risk Dimensions, argued that Bitcoin’s youth and instability deter major buyers like central banks and sovereign wealth funds, who traditionally favor the tried-and-true nature of gold. The established trading channels and existing gold accounts further reinforce the preference for gold during uncertain times.
Economic analysts like André Dragosch have pointed out that Bitcoin is currently reflecting a particularly bearish outlook on global growth, reminiscent of the environment during the COVID-19 pandemic and the implosion of FTX. This climate has driven capital towards more reliable havens, with gold being perceived as a safer asset when risks loom large—something Bitcoin has yet to establish.
Despite Bitcoin’s struggles, some analysts suggest that the current market conditions might shift in its favor. Improvements in macroeconomic conditions could potentially unlock significant appreciation for Bitcoin, transforming it into a valuable investment option over time. For now, the momentum heavily favors gold as a trusted hold and liquidity asset, while Bitcoin remains a speculative investment with long-term potential yet to be fully realized.
