Translated by: Blockchain Plain Language

Cryptocurrency investors have long referred to Bitcoin as "digital gold". If that's true, then Bitcoin (BTC -1.22%) - like gold - should be able to hedge against the market volatility and economic uncertainty currently experienced by investors.

But let's look at the current situation. Gold prices have just broken through $3,000, hitting a historic high and rising 15% so far this year. In contrast, Bitcoin has dropped nearly 20% from its historical high of $109,000 in January.

Gold seems to be rising, while Bitcoin - at least at this moment - seems to be falling. So, which is the better investment choice right now? The answer may not be as obvious as you might think.

Bitcoin: Digital Gold or Tech Stock?

A key factor to remember is Bitcoin's correlation with the stock market. For most of its history, Bitcoin was completely uncorrelated with the stock market, which is why it was so attractive to many investors. In 2024, WisdomTree (WT -2.24%) conducted a comprehensive study on Bitcoin, finding that Bitcoin has almost no correlation with the stock market, except for some brief periods since 2012.

In many ways, this lack of correlation makes Bitcoin the ultimate portfolio diversification tool. Bitcoin is not only uncorrelated with the stock market - it is uncorrelated with all major asset classes. It seems unique, and Wall Street also acknowledges Bitcoin's potential as a tool to hedge economic uncertainty and market volatility.

But in 2025, something very strange is happening: Bitcoin is becoming more and more like a tech stock. Increasing statistical evidence supports this view.

In March, Standard Chartered carefully studied Bitcoin's correlation with the stock market and found that Bitcoin's correlation with Nasdaq is now 0.5, having been as high as 0.8 earlier this year. Meanwhile, Bitcoin's correlation with gold seems to have been lost, now only 0.2, and even zero earlier this year.

These numerical changes may seem small, but they are significant in investors' eyes. This suggests that Bitcoin may no longer be a safe-haven asset. Of course, correlations change over time, but Bitcoin is now highly consistent with tech stocks. Simply put, buying Bitcoin now is like buying a highly volatile tech stock. If tech stocks fall, Bitcoin will fall; if tech stocks rise, Bitcoin will rise.

Gold vs Bitcoin

Image source: Getty Images

Any claim that Bitcoin is digital gold now looks like a pipe dream. How can it be digital gold if Bitcoin isn't even correlated with gold? If Bitcoin is a tool to hedge economic uncertainty, why is its price still falling?

Where Will the Economy Go in 2025?
Understandably, many Bitcoin investors (like tech stock investors) have begun to be obsessed with the latest U.S. macroeconomic data. All these data - inflation reports, consumer confidence reports, GDP reports - are crucial to understanding Bitcoin's next move.

The potential impact of large-scale comprehensive tariffs remains unknown. If these tariffs push the U.S. economy into recession while causing price increases due to tariffs, the situation could become very bad. You can ask ChatGPT what happened when stagflation became the new economic buzzword in the 1970s.

According to traditional wisdom, if you believe the economy will fall into recession due to tariffs, you should buy gold; if you believe the economy will rebound strongly due to "America First" tariff policies, you should buy Bitcoin.

Will Gold Really Outperform Bitcoin in 2025?
Based on the latest economic data, Goldman Sachs predicts that gold prices could reach $3,300 by the end of 2025. This is a 10% increase from the current $3,000 price.

But guess what? Bitcoin can rise 10% within a 24-hour trading period. Achieving this performance in the next 9 months seems not difficult for Bitcoin, which has a history of triple-digit annual returns.

Therefore, although gold now seems like an obvious, no-brainer investment choice, and Bitcoin is becoming more like a tech stock, I still choose Bitcoin. Ultimately, I believe Bitcoin will outperform gold in 2025.

Article link: https://www.hellobtc.com/kp/du/03/5732.html

Source: https://www.fool.com/investing/2025/03/28/better-buy-bitcoin-or-gold/