Is gold or bitcoin the better investment?
Analysis: Gold and Bitcoin are fundamentally different in what gives them value, how that value goes up over time, and how resilient it is
When people compare gold and bitcoin, they often treat them as two sides of the same coin: modern “digital gold” vs. ancient “metallic gold”, but this is a misleading parallel. Gold and Bitcoin are fundamentally different in what gives them value, how that value goes up over time, and how resilient that value is under stress when uncertainty rears its head, and investors panic.
The primary difference between the two is that gold has real physical sources of demand, and official institutional backing, which lead to distinct price behaviour. And even as prices for gold fall this week there are still good reasons to view it as a better long run investment.
Institutional and consumer anchors
One of the strongest advantages gold has over bitcoin is that its value is tethered to real, ongoing demand for the physical metal, especially through jewellery demand. Over half of all gold ever mined is owned by people as jewellery, linked to its an ongoing cultural utility. Gold is bought for adornment, as an heirloom, or for ceremonial uses in many cultures. That keeps a baseline of demand for it, even if investment flows turn cold. In contrast, bitcoin has no physical use: it can’t be worn or melted down. It is entirely digital, and its utility remains tied to network adoption and belief. Golds value is also tied to believe but that has been ingrained in economies and cultures for a long time when compared to bitcoin.
Furthermore, for the past three years (2022-24), central banks have been record buyers of gold, adding over 1,000 tonnes per year to their reserves. In 2025, central bank demand has slowed to more normal levels, purchases are still happening but not at the same frantic pace as before. For instance, August saw net purchases by Central Banks worldwide.
This is not casual investing; it is central banks reallocating their balance sheets to reduce reliance on the dollar and in some cases diversify against the risk of sanctions. That renewed institutional demand created a floor under Gold’s price during those three years when other factors, such as rising interest rates, led meany to think that gold prices would fall. It also gives markets confidence that in a crisis, central banks will serve as anchor holders of gold, who wouldn’t be forced to sell if a recession arrives this year.
Meanwhile investors, via Exchange Traded Funds (ETFs), had been stepping up their gold purchases. All regions of the world have seen eight straight weeks of net purchases by ETFs. Banks like Goldman Sachs expect sustained demand from both ETFs and residual central bank flows to push Gold toward new highs in 2026.
Because gold combines consumer demand with investment demand, it is less reliant on pure belief. If markets panic, and investors start to sell as they have over the last few days some gold other sources of demand like jewellery buyers have traditionally started to step in to buy at the lower price, putting a floor under fall.
Bitcoin’s speculative divergence
Bitcoin’s weakness is not its volatility per se, some volatility is a normal, and as bitcoin is a much smaller market than gold, it is expected that it would experience bigger swings in price. The problem is that bitcoin’s value depends almost entirely upon investor sentiment, liquidity cycles, and the current market narrative, rather than any underlying real utility.
Analysts have noted that gold and Bitcoin have begun to act differently. For example, by late March 2025, while gold had gained ~16%, Bitcoin had declined ~6%. This illustrates that whatever “safe-asset narrative” had tied them together before is fraying. According to CME Group, this decoupling reflects distinct influencing factors: central bank flows and inflation hedging for gold, versus liquidity conditions, risk sentiment, and speculative rotations for bitcoin.
Increasingly it seems that bitcoin tends to follow risk assets: when liquidity is withdrawn or risk aversion sets in, bitcoin often suffers first. Gold more often acts as a refuge. In 2025 while bitcoin has staged strong rebounds, its underlying swings remain violent and disconnected from fundamentals.
A clear divergence came during the tariff shock triggered by President Trump’s announcement of 100% tariffs on China last week. Stocks plunged 3% that day in response, and bitcoin followed suit, falling more sharply than equities, while Gold held up far better. That is exactly the kind of stress test scenario where Gold demonstrates its edge. bitcoin fell ~8.4% to just under $105,000 on October 10, after the tariff announcement. Gold, meanwhile, held steady as the market panicked and continued its rise to a new record high above $4,078 per ounce, driven by safe-haven demand due to continued tariff uncertainty. Since then, bitcoin is still about 2% lower than before the new tariffs, while Gold has risen further to over $4,000.
Is gold at $4,000 still good value?
Having said all that, gold has had a horrible week down over 5% as the incredible increases in price it has seen this year started to spook investors (+60%). It would be wrong to claim that gold is still a bargain even as its price breaches new all-time highs of over $4,000 per ounce for the first time. At this price level, gold investment does becomes more speculative and the steep falls this week have not surprised markets. But I maintain the superiority argument holds, because this bull run is still modest in historical context, and because Gold’s drivers are fundamentally more durable.
Read more: Why would anyone want to invest in gold?
Although gold has crossed $4,000 for the first time, it is still the smallest bull market since the Gold Standard ended. In other words, there might still be room for further gains, even if we are now in bubble territory. Many analysts believe this leg has structural backing, not just speculation. For instance, Bank of America recently raised its gold forecast to $5,000/oz by 2026, citing a 14% increase in investment demand as plausible.
Second, in 2025 the mix of buyers is shifting. While central bank purchases are slower, investors are now the major driver of the price rises as they chase the price higher. That transition shows one of gold’s great strengths versus an asset like Bitcoin: the diversity of its sources of demand. Gold prices depend on small buyers in the form of jewellery and small bars, as well as investors who buy and hold gold as a paper asset through ETFs and, uniquely, gold still holds onto its monetary status in some form as the second largest asset held by central banks in 2025. Long-term holders of gold will continue to direct gold’s path.
All bull markets eventually end…
So, has the gold price further to rise or has the bubble already burst? Even if the selloff is short lived there are risks in the medium term to gold holders. Prices also surged during the uncertainty of the Euro area crisis in the 2010’s, when the Troika held sway in Ireland and Greece was being threatened with expulsion from the euro. Prices reached a brief record then of $1,900 before dropping below $1,200 in 2016. The uncertainty faded, as hopefully our current tariff uncertainty will soon do, and if it does, the current set of uncertain buyers may decide to continue to sell gold, sending gold’s price back down.
But calling the end of a bull market accurately is impossible. It is unclear what caused seeing to start on Monday of this week, other than the nerves of high prices, and never know what will tip buyers into becoming sellers and the price trend to change, the main reason being that we cannot predict the future. And there are still other risks to the global economy that could push investors back to gold and prices to new highs. One such is the much-discussed bubble in the valuation of AI companies on the stock market bursting, adding a new uncertainty to financial markets that could send gold on another price surge from here. In an uncertain world, gold’s long running blend of tangible utility and institutional trust continues to give it an edge over digital faith in bitcoin.