With gold on a tear this year, we take a close look at how it compares to digital gold, bitcoin, across key dimensions.
While gold has the edge over bitcoin in some areas, like volatility and societal acceptance, those differences are narrowing over time as bitcoin matures.
As Gold Proves its Mettle, We Compare it to Bitcoin
Gold has been on a tear this year, climbing 26.7% through Thursday. This surge comes despite broader market pressure from the Trump administration’s ongoing tariff battles, which have weighed on many other asset classes. While bitcoin has managed to weather the tariff-driven volatility, gold has not only survived, it has thrived.
This isn’t a sudden shift, either. Gold delivered strong returns in 2023 and 2024, and even in 2022—when nearly every other asset class fell against the rising rate environment—it held steady. With both gold and bitcoin serving as non-sovereign stores of value, it’s worth exploring what’s been fueling gold’s recent momentum. At the same time, we’ll compare it to bitcoin and consider whether investors, in their search for hard assets untethered from any single geopolitical force, are increasingly turning to these alternatives.
Returns Comparison
As previously discussed, gold has shown strong relative performance amid tariff-induced market volatility. However, this trend extends beyond the short term, as the following table illustrates. Over the trailing 1- and 3-year periods, gold has outperformed all major asset classes except bitcoin over the 3-year period. Even over the 5- and 10-year horizons—despite lagging select equity benchmarks—gold has achieved robust absolute returns.
Gold Drivers – Real Yields, Inflation, and Central Banks
Historically, gold prices have been influenced by two primary macroeconomic factors: inflation and real interest rates. In the 1970s, a combination of stagflation and the US ending the dollar’s convertibility into gold at a fixed price of $35/oz were the key drivers of gold’s surge. Since then, however, gold has largely been driven by movements in real interest rates—that is, the inflation-adjusted return investors can earn on “risk-free” assets, which reflects the true value of money over time.
The yield on 10-year Treasury Inflation-Protected Securities (TIPS) has consistently served as one of the best proxies for movements in the price of gold. As real yields fall, investors increasingly favor non-yielding stores of value like gold (and bitcoin). In fact, during several periods over the past decade, most notably from 2011 to 2014 and again from 2020 to 2022, 10-year TIPS yields were negative, meaning investors were effectively accepting a guaranteed loss in purchasing power in exchange for safety.
Real yields can be thought of as a kind of forcing function: when they decline, investors are pushed further out on the risk curve in search of positive real returns (increasing the purchasing power of their dollars). Conversely, when real yields rise, investors can increase their power without taking on significant risk (increasing)—reducing the relative appeal of gold.
Central Bank Buying in the Driver’s Seat Since 2022
Since 2022, the primary driver of gold prices has shifted away from traditional macroeconomic factors. Despite rising real interest rates, typically a headwind for gold, prices have been driven by increasing demand, particularly from central banks. Over the past three years, central bank gold purchases have exceeded 1,000 tonnes annually, far surpassing the average levels seen over the previous decade.
To put it in perspective, since 2022, central banks have been acquiring nearly one third of total global gold production—historic levels not seen in the post–Bretton Woods era. While China has been a big factor in that demand, the most active buyers in the past year were Poland, Turkey, and India. Central bank demand seems to be fueled broadly by de-dollarization efforts, concerns over fiat currency debasement, waning confidence in Western fiscal discipline, and escalating geopolitical tensions—factors that do not seem to abating.
Comparing Bitcoin and Gold
While bitcoin is often described as “digital gold” to help simplify its use case for investors, a direct comparison between bitcoin and gold can offer deeper insight into their key differences. By highlighting various economic, financial, and fundamental characteristics, we can better understand where bitcoin is most like gold and where it diverges. The table below outlines several of these distinctions, highlighting both the advantages and limitations of each asset.
We’ll cut to the chase though. Gold has the edge on bitcoin in some important areas – societal adoption and acceptance, which dates back to earliest human civilizations, either used for financial or ornamental purposes. Gold is also larger in total value and less volatile (about 30% of bitcoin’s volatility). It also has no technical risk associated with it (Bitcoin is still software at its core) and is widely purchased and owned by central banks around the world.
In nearly every other measure, however, bitcoin has the edge – supply growth, monetary policy, supply cap, as well as its usability stemming from its digital only nature. Even in the areas in which bitcoin is deficient compared to gold, longevity and volatility, those gaps are narrowing over time.
Supply and Monetary Policy Comparisons
If there’s one thing most investors know about bitcoin, it’s that its supply is famously capped at 21 million. While Satoshi never fully explained the reasons that number was chosen, the intention seems clear: scarcity was essential to give the asset value. Without bitcoin having “value”, much of the glue that binds it together, like mining, would fall apart. But it’s worth understanding that bitcoin’s cap isn’t enforced by some “counter” that stops at 21 million—it’s coded into the protocol’s monetary policy. Once we reach the 33rd halving, and the block reward is 1 satoshi, the network can no longer divide it at the next halving, meaning no more bitcoin can be mined, creating a finite supply.
Gold, too, is prized for its scarcity but unlike bitcoin, its supply isn’t technically fixed. In theory, we could keep finding more. In practice, gold is constrained by geology, economics, and technology. Most of Earth’s gold isn’t accessible because it sank to the planet’s core during formation. What’s left in the crust—what we can actually mine—is only a fraction of the total. And unlike elements like hydrogen or helium, gold wasn’t forged in the Big Bang or inside the fiery crucible of stars. Nearly all the gold in the universe comes from two rare events: supernovae and neutron star collisions. In the former, massive stars explode in their final moments, unleashing enough energy to create heavy elements, like gold. In the latter, two ultra-dense already dead stars collide, ejecting gold and other precious metals into space. Much of the gold accessible on Earth today likely came from meteorites that delivered the metals long after our planet formed. Pretty metal, right?
These differences between gold and bitcoin become more apparent when supply growth (annual production) and total supply are compared over time. The amount of gold mined annually has increased over time likely due to improvements in extraction techniques (technology) at a consistent rate – 1.6% annually on average. This is opposed to the annual production of bitcoins. Even as technology has improved and increased hash rate, due to the difficulty adjustment the production of bitcoins will programmatically decline over time and will eventually go to zero.
The differences in the supply functions of gold and bitcoin result in vastly different growth trajectories for their outstanding supply. Gold’s supply grows along an exponential curve, which might be ideal for describing technological or societal progress—but it’s far less suitable for a scarce store-of-value asset. The notion of an asset with an “exponentially expanding supply” runs counter to the very concept of long-term value preservation. Yet, that’s the uncomfortable reality gold faces.
Volatility Gap is Narrowing over Time
One of the most common concerns we hear from investors about allocating to bitcoin is its volatility. While bitcoin remains volatile on an absolute basis, the encouraging trend is that its volatility has been declining over time as the asset, the underlying technology, and the investor base have matured. As of the end of Q1 2025, bitcoin’s annualized realized volatility stood at 52.2%, down well from the triple digits it once was.
In contrast, volatility across many other asset classes has been rising. Gold’s volatility remains low on an absolute basis with an annualized volatility of 15.5%, but that figure has also increased over time. Looking ahead, while the policy and economic direction of the Trump administration introduces a degree of uncertainty, one thing seems clear: we are likely entering a period of structurally elevated volatility across most traditional asset classes.
As a result of the secular decline in bitcoin volatility, the ratio between bitcoin and gold volatility has narrowed over time, reaching 3.6x at the end of last quarter. We expect this convergence to persist, as bitcoin’s ongoing maturation supports a long-term trend of declining volatility.
Market Update
Bitcoin rose 6.6% on the week, again proving its resiliency in the face of tariff and geopolitical uncertainty. Gold performed well as well, rising 4.9% on the week, bringing its annual return to 25.3%. Stocks were mixed in choppy trading. The S&P 500 rose 0.3% while the Nasdaq fell 0.6%. Bonds found their footing after a shaky week, rising over 1%. Comments from Fed Chair Powell indicated uncertainty in assessing the impact of the administration’s moves on inflation and employment. Despite public pressure from the President, it seems as if the FOMC is not in a hurry to lower rates to stimulate the economy.
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