The narrative around 'digital gold' suggests that Bitcoin should rise, but instead, it has been crushed by the shiny rocks for over a year.
#### Introduction
The article discusses the recent performance of Bitcoin (BTC) and challenges the idea that it acts as 'digital gold'. It highlights a separation where Bitcoin's performance has been below that of gold for over a year, despite the narrative suggesting it should rise amid economic uncertainties. The article is published under the category of cryptocurrency news, with Bitcoin priced at $88,251 (+0.88%) and Ethereum at $2,920 (+1.63%) at the time of writing.
#### Key Arguments
The core argument is that Bitcoin should not be viewed as digital gold but as 'an improved version of stocks' and the most risky asset in the financial system. The analyst, known as Market Radar, states in a post on X that gold and Bitcoin serve different roles: gold is the ultimate safe asset, benefiting from inflation fears, debt, and currency depreciation, while Bitcoin thrives in high-risk appetite environments with abundant liquidity and investor confidence.
Key quotes from Market Radar:
- "Gold is the ultimate bond, one without default risk but also without a coupon. It is where capital flows when inflation fears and the credibility of states push investors closer to the risk curve, away from duration and towards something that cannot be printed or defaulted on. Bitcoin, in contrast, is the most risky asset on the board. It represents partial ownership of something entirely digital, something that cannot be touched, something with no real utility in the world outside of financial products. Bitcoin is a liquidity release valve when conditions are good and investors want to push further on the risk curve. It is an improved version of stocks, not a competitor to gold."
This distinction is supported by market performance in 2025, where gold rose due to central bank buying and declining real yields, while Bitcoin collapsed, retreating up to 35% from its peak in early October.
Additional factors contributing to Bitcoin's weak performance include global liquidity issues:
- The collapse of the Japanese yen trade, driven by the Bank of Japan (BOJ) raising interest rates, pressures Bitcoin as global capital tightens.
- Even with the Federal Reserve's (Fed) dovish stance and interest rates trending downwards, BOJ actions caused 'neglected liquidity pressure' on Bitcoin.
- Quote: "The Fed can be neutral, local conditions can be supportive, yet Bitcoin may face liquidity headwinds from a central bank on the other side of the world. This is the reality of trading the most risky asset on a globally connected curve."
Another overlooked aspect is the difference in market support between Bitcoin and stocks:
- Stocks benefit from a 'huge negative flow cushion' through automatic allocations to historical target funds and index funds, which are indifferent to liquidity events or risk sentiment, allowing them to withstand liquidity contractions or recession fears.
- Bitcoin lacks this negative supply, leading to faster collapses in tight conditions.
Despite these challenges, the analyst indicates the system is improving, with 'confirmation of a high-risk investment environment', but Bitcoin needs to demonstrate this by breaking out of its downward price structure. Until then, Bitcoin is described as 'a falling knife we don't want to catch', meaning it is not advisable to buy yet.
Supporting details include:
- Gold has outperformed Bitcoin for over a year due to central bank buying and tighter global liquidity that favors safe assets over risky assets like Bitcoin.
- For Bitcoin to rise, it needs clearer high-risk investment conditions and a breakout from its downward structure.
The article includes a FAQ section summarizing the key points:
- Why doesn't Bitcoin behave like digital gold in 2025? Bitcoin trades as a high-risk asset, not as a safe asset like gold.
- How does Bitcoin differ from gold in market behavior? Gold benefits from inflation fears and low yields, while Bitcoin only rises when liquidity and risk appetite are strong.
- Why has gold outperformed Bitcoin for over a year? Central bank buying and tighter global liquidity favored gold while pressuring risky assets like Bitcoin.
- What needs to happen for Bitcoin to rise again? Bitcoin needs clearer high-risk investment conditions and a breakout from its downward price structure.
Tags associated with the story: Bitcoin (BTC), gold, stocks.
#### Conclusion
The article concludes that Bitcoin's weak performance is not a sign that it is 'over', but that current conditions – including counter liquidity headwinds from global central banks and a lack of negative flows – have not supported a rally yet. However, as the system improves and high-risk investment sentiment is confirmed, a breakout from its downward structure may indicate a new rise. It emphasizes viewing Bitcoin as a risk asset similar to stocks rather than a competitor to gold, advising caution until such a breakout occurs.