The Theory and Truth: Why Bitcoin Fails as a Safe Haven Compared to Gold

The difference between theory and practical results is clearly evident in the recent market crisis. Last week, when Trump imposed tariffs and threats against NATO allies, the market responded with rising fear. In this major test, Bitcoin and gold showed vastly different reactions—an outcome that shifts our understanding of how these assets truly function as risk protections.

Bitcoin vs Gold: Protection Campaign in Times of Stress

Since January 18, last week, Bitcoin lost 6.6% of its value, while gold rose by 8.6% toward a new high close to $5,000. This contrast reflects a fundamental truth: amid market turmoil, gold acted as a true refuge, while Bitcoin exhibited greater volatility.

The data is clear. While investment portfolios experienced stress in the global market, Bitcoin declined while gold reached new records. This is not just a price change—it indicates deeper dynamics about how they actually operate when individual investors seek protection.

ATM Dynamics: How Liquidity Becomes a Vice

In theory, Bitcoin should outperform gold in times of fear because it is a digital currency resistant to censorship and control. But in practice, different aspects of Bitcoin prompt investors to sell quickly when they need cash.

According to Greg Cipolaro, Global Head of Research at NYDIG, Bitcoin functions like an “ATM” during uncertain times. Its continuous trading, deep liquidity, and instant settlement make it very easy to sell when investors need money. Conversely, gold is harder to sell quickly, so holders tend to keep it.

“In times of stress and uncertainty, liquidity preference takes precedence, and this dynamic is more damaging to Bitcoin than to gold,” Cipolaro said. Although Bitcoin is highly liquid relative to its size, it is sold faster because traders are no longer using leverage. As a result, Bitcoin is often used to raise cash and reduce risk in portfolios, even though its long-term story may change.

Central Banks and Long-Term Holders: Different Strategies

The contrasting behavior of large holders further amplifies this dynamic. Central banks worldwide are buying gold at unprecedented levels, creating strong demand that supports its price. This is a consistent and long-term pattern that keeps gold resilient.

On the other hand, on-chain data shows a different story for Bitcoin. Old holders continue to sell, and vintage coins keep moving to exchanges. This “seller overhang” results in weeks of selling pressure, lowering prices and weakening support.

Cipolaro offered a contrasting view: “The opposite dynamic occurs with gold. Large holders, especially central banks, continue to accumulate the metal. This creates a structural support absent in Bitcoin.”

Short-Term vs Long-Term: How the Market Defines Risk

The key difference lies in how the market classifies different types of risk. The current turmoil—from tariff threats to potential Arctic actions—is viewed by investors as short-term and episodic. It is not a systemic long-term crisis.

Gold has long served as protection against such short-term and episodic fears. “Gold performs very well during moments of rapid loss of confidence, war risks, and fiat declines without requiring a complete systemic breakdown,” Cipolaro added.

In contrast, Bitcoin is more suited for long-term concerns—such as ongoing erosion of trust in fiat currencies or sovereign debt crises that unfold over years, not weeks. “Bitcoin is more appropriate for safeguarding against long-term financial and geopolitical turmoil, and the slow erosion of trust that occurs over years, not weeks,” he said.

While the market believes current risks are dangerous but not yet fundamental, gold remains the preferred asset for protection.

Crypto Market Snapshot: Where Bitcoin and Other Assets Stand

In the broader cryptocurrency landscape, Bitcoin is steady around $88.25K, down 1.05% in the past 24 hours. Most major assets follow the same trend, with Ethereum down 1.86%, Solana down 2.92%, Dogecoin down 2.80%, while BNB remains more stable, down only 0.17%.

The ongoing pressure on Bitcoin reflects a larger pattern. Bitcoin is roughly 30% below its October peak, stuck in a stable consolidation above the key resistance near $89,000. Analysts remind that Bitcoin is more recognized as a high-beta risk asset than a true macro hedge.

The sharp rebound of the US dollar and continued strength in commodity prices—especially record highs for gold and high prices for silver and copper—set a deeper tone for the cryptocurrency markets. Competition from traditional safe-haven assets continues to exert downward pressure.

Implication: Understanding Bitcoin’s Long-Term Role

This experience offers valuable lessons about Bitcoin’s actual role. The theory suggests it should act as digital gold, the perfect hedge against all types of economic risks. The practical results are more nuanced.

Bitcoin has not failed as a long-term systemic safe haven—such as against inflation or systemic collapse. It has failed as an instant protection during short-term episodic fears because its high liquidity becomes a weakness when investors need cash.

Gold, on the other hand, continues to demonstrate true safe-haven properties due to its unmatched combination of historical demand, central bank buying, and lower trading frequency. As Bitcoin continues to develop as a long-term monetary instrument, understanding its true dynamics is critical for investors seeking to use it for protection.