In theory, Bitcoin should thrive in times of uncertainty because it is a sound currency that is not subject to censorship. In fact, it’s becoming the first thing investors sell in a pinch.
Markets have retreated and volatility has intensified over the past week as geopolitical tensions heightened amid Trump’s threats to impose tariffs on NATO allies over Greenland and speculation about possible military action in the Arctic.
Since Trump first threatened tariffs on January 18 to push for the acquisition of Greenland, Bitcoin has fallen 6.6% in value, while gold has risen 8.6% to a new high near $5,000.
The reason lies in how each asset fits into a portfolio during times of stress. Bitcoin’s always-on trading, deep liquidity, and instant settlement make it an easy asset to sell when investors need to raise cash quickly.
Although gold is not easy to obtain, people tend to hold it rather than sell it. Greg Cipolaro, global director of research at NYDIG, said this makes Bitcoin behave more like an “ATM” during times of panic, thereby damaging its reputation as digital gold.
“During times of stress and uncertainty, liquidity preferences take over, a dynamic that hurts Bitcoin far more than gold,” Cipolaro wrote.
“Despite its liquid size, Bitcoin remains volatile and reflexively sells off as leverage is unwound. So in risk-off environments, regardless of its long-term narrative, it is often used to raise cash, reduce VAR and de-risk portfolios, while gold continues to act as a true liquidity sink,” he added.
Major shareholders are not helping either.
Central banks have been buying gold at record levels, creating strong structural demand. Meanwhile, long-term Bitcoin holders are selling their coins, according to a report from NYDIG.
On-chain data shows that antique coins are continuing to flow to exchanges, indicating a steady stream of sales. This “seller glut” weakens price support. “The opposite dynamic is happening in gold. Large holders, especially central banks, continue to accumulate gold,” Cipolaro added.
This mismatch is exacerbated by the way markets price risk. The current turbulence is considered intermittent and driven by tariffs, policy threats and short-term shocks. Gold has long been a hedge against this uncertainty.
In contrast, Bitcoin is better suited to solving long-term problems, such as fiat currency devaluation or sovereign debt crises.
Cipolaro added: “Gold excels in moments of immediate loss of confidence, risk of war and devaluation of fiat currencies that do not involve a full-blown system collapse.”
“Bitcoin, by comparison, is better suited as a hedge against longer-term monetary and geopolitical dislocations, and the erosion of trust that occurs slowly over years rather than weeks. As long as markets view current risks as dangerous but not yet fundamental, gold remains the hedge of choice.”
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