Bitcoin was supposed to shine in moments of uncertainty, but in 2025 investors have overwhelmingly chosen traditional gold instead. While gold prices have surged to repeated record highs, bitcoin has failed to recover from a sharp sell-off late last year, undermining the long-standing narrative that the cryptocurrency functions as “digital gold.”
In dollar terms, the contrast is striking. Gold is up roughly 70% so far this year, while bitcoin is down about 6%. The two assets, often compared as alternative stores of value, have moved in opposite directions, with any meaningful correlation breaking down entirely.
On paper, conditions should have favored bitcoin. Global geopolitical risks have remained elevated throughout the year, with fresh uncertainty added by Donald Trump’s unclear stance toward Venezuela. If bitcoin were truly a hedge against instability, this environment should have boosted demand.
The fiscal backdrop has also supported the traditional case for hard assets. The United States continues to run enormous budget deficits. According to the International Monetary Fund, US debt is projected to rise from 125% of annual economic output to 143% by 2030 — exceeding the debt levels of Greece and Italy. For those who view bitcoin as protection against government-driven currency debasement, such projections should have strengthened its appeal.
Even the technology narrative offered potential support. Enthusiasm around artificial intelligence has dominated markets this year, and although concerns about an AI bubble persist, major beneficiaries such as Nvidia remain significantly higher since January. If bitcoin were still treated as a proxy for cutting-edge innovation, it might have benefited from the same momentum.
Regulatory conditions were also unusually favorable. Crypto exchange-traded funds are now offered by major financial institutions, bringing digital assets deeper into mainstream portfolios. In the UK, the financial regulator has published proposals to regulate large parts of the crypto market, providing clarity long sought by the industry.
Paradoxically, this growing acceptance may be part of bitcoin’s problem. As cryptocurrencies have been absorbed into the financial mainstream, much of their rebellious appeal has faded. When banks like JPMorgan and asset managers such as BlackRock describe bitcoin as just another asset class, its revolutionary aura weakens. Public interest reflects this shift: Google searches for “bitcoin” have flattened, and even Elon Musk has largely moved on to other topics.
The decisive break between gold and bitcoin occurred in October, when bitcoin suffered a rapid sell-off. What exactly triggered the decline on 10 October remains debated, but heavy selling by leveraged investors in a thin market appears to have played a major role. This was compounded by fears sparked by Trump’s threat of new tariffs on China. Unlike equities and precious metals, however, bitcoin did not rebound afterward.
The broader crypto market lost more than $1 trillion in value over the following six weeks. Bitcoin fell from a peak of about $126,000 in early October to roughly $87,000 today, and the recovery many expected never materialized.
In a research note published last month, analysts at Deutsche Bank outlined five factors behind the downturn. These included a general shift toward risk-averse behavior in October, hawkish signals from the US Federal Reserve on interest rates, weaker-than-expected regulatory momentum, thin market liquidity combined with institutional outflows, and profit-taking by long-term holders.
The bank concluded that it remains unclear whether bitcoin will stabilize after this correction. Unlike previous crashes driven largely by retail speculation, this decline has taken place amid heavy institutional involvement, evolving policy frameworks, and powerful global macroeconomic forces.
For committed bitcoin advocates, setbacks are simply opportunities to buy more. Their confidence has been rewarded in the past, and given bitcoin’s history of recovering from severe declines, it would be premature to declare them wrong.
Still, something appears to have shifted in 2025. When investors actively sought reliable defensive assets, they turned to gold — and even silver, which performed better still — rather than to a digital asset that has yet to function meaningfully as a medium of exchange. As the year draws to a close, questions are growing about the true depth, resilience, and long-term appeal of bitcoin and similar cryptocurrencies. The speculative excitement that once defined the market no longer feels as powerful as it once did.