Better Buy: Bitcoin vs. Gold

Thus far, gold has vastly outperformed Bitcoin (CRYPTO: BTC) in 2025. For the year, gold is up 30% and is now trading at all-time highs. Amidst all the tariff uncertainty, investors are searching out safe havens to preserve the value of their money, and gold is arguably the safest of all safe havens.

But don't sleep on Bitcoin. The "digital gold" narrative is making a comeback, and Bitcoin recently regained the $90,000 price level for the first time in weeks. So which is the better investment right now: Bitcoin or gold?

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The unique diversification properties of Bitcoin

In September 2024, BlackRock (NYSE: BLK) released a brief 10-page report: "Bitcoin: A Unique Diversifier." The report examined the unique diversification properties of Bitcoin as a scarce, decentralized, non-sovereign, global asset. Ultimately, BlackRock concluded that Bitcoin did not fit into the traditional framework of "risk on" and "risk off" assets.

Image source: Getty Images.

Yes, Bitcoin is risky in the sense that it is still a relatively new technology with an uncertain regulatory future. And, yes, Bitcoin is risky due to its high volatility. But here's the thing: Bitcoin also has many of the same properties that you would expect to find in a safe haven asset such as gold.

Most importantly, Bitcoin has historically been uncorrelated with any major asset class, making it a potential hedge against declining stock prices. Moreover, as a global asset completely outside the control of sovereign governments and central banks, Bitcoin is not tied to the economic fortunes of any single nation.

Bitcoin as a safe haven?

As BlackRock pointed out, Bitcoin can act as a safe haven during times of economic and geopolitical uncertainty. To underscore this point, they looked at six recent events that "shocked" the global financial system (such as the outbreak of COVID-19 and the start of the Russia-Ukraine war in 2022), to see how both gold and Bitcoin reacted to these major geopolitical events.

Without looking at the numbers, you might guess that gold performed much better than Bitcoin over both the short term (10 days out) and the long term (60 days out). But you'd be wrong. As BlackRock found, Bitcoin typically had a temporary negative reaction before suddenly soaring higher. In five of the six cases examined, Bitcoin outperformed gold over the 60-day period. And in three of the six cases, it outperformed gold over the 10-day period as well.

Sound familiar? This seems to be the same situation that is happening now with tariffs. Gold initially outperformed Bitcoin when tariffs were first announced, but now Bitcoin is starting to gain momentum. As some investors now see it, Bitcoin might actually be a safe haven, especially if economic instability leads to geopolitical instability.

The one chart that says it all

All the talk about gold outperforming Bitcoin in 2025 has made many investors forget about the incredible performance of Bitcoin over the past decade. In seven of the past 10 years, Bitcoin has been the best-performing asset class in the world.

Nonetheless, investing is often a game of "what have you done for me lately," so let's compare the performance of Bitcoin and gold over the past year. For the sake of argument, let's use the iShares Bitcoin Trust (NASDAQ: IBIT) from BlackRock as a proxy for the price of Bitcoin, and the iShares Gold Trust (NYSEMKT: IAU) from BlackRock as a proxy for the price of gold.

IBIT data by YCharts

As shown by data from TradingView, Bitcoin has trounced gold since the launch of the iShares Bitcoin Trust in January 2024. During that time period, the Bitcoin ETF is up 116%, while the gold ETF is up 68%. Even with Bitcoin declining in value this year, and gold soaring in value, the Bitcoin ETF has still outperformed the gold ETF.

What happens next with Bitcoin?

The chart clearly shows an inflection point for Bitcoin around "Liberation Day" on April 2. After trading sideways for weeks, Bitcoin suddenly made an upward move. Amidst all the talk about a global trade war and the White House's new spat with the Federal Reserve over interest rates, this upward move might become even more pronounced.

If recent history is any guide, Bitcoin is the one asset that you want to be holding during periods of economic and geopolitical instability. As it turns out, Bitcoin is a lot less risky than many people imagine. And it can often outshine gold, even when you expect it the least. Thus, even after turning in a tarnished start to the year, Bitcoin might still outperform gold in 2025.

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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.