The 'Digital Gold' Debate Heats Up: Why Bitcoin Can't Keep Pace With Precious Metals This Year

Gold is having a monster year while bitcoin keeps stumbling at critical resistance levels. This divergence is sparking renewed questions about whether cryptocurrency can actually function as digital gold—and the answer, at least for now, appears to be no.

Gold’s Bullish Year Defies the Bitcoin Narrative

Precious metals have been on a tear. Gold has climbed over 70% in 2025, silver surged roughly 150%, and platinum hit record highs. These are the strongest annual performances since 1979, driven by two powerful forces: expectations of rate cuts from central banks and persistent geopolitical tensions creating demand for safe-haven assets.

Bitcoin, meanwhile, has struggled to hold key psychological price levels. While it’s also posted gains this year, the cryptocurrency keeps surrendering them during market rebounds, as traders lock in profits at every opportunity. The underlying problem is structural, not just timing.

Market Structure and Macro Conditions Are Working Against Crypto

The real issue isn’t hard to spot: bitcoin and gold are responding to different market dynamics. Even when interest rate cuts appear likely, bitcoin needs more than just a softer policy environment—it requires genuine risk appetite. Recently, that appetite has been whipsawed by volatile bond yields, swinging dollar values, and repeated shifts into defensive positioning.

Gold thrives in this exact environment. It’s already embedded in central bank reserves and flows naturally when institutions prioritize capital preservation. Bitcoin, by contrast, remains a retail-dominated asset. It moves with equities and risk sentiment rather than against them.

The Reserve Asset Problem

David Miller, chief investment officer at Catalyst Funds, framed the issue bluntly: “Gold can have a record year while bitcoin is down in the same year. It’s clearly not digital gold.” His point cuts deeper than simple price comparison.

Gold holds institutional legitimacy that bitcoin hasn’t achieved. Central banks hold it as an official reserve asset; corporations and governments recognize it as a store of value. Bitcoin remains largely a retail speculation and hedge play. As Miller noted, “what gold does that bitcoin definitely can’t is serve as an actual alternative reserve asset to a currency.”

This doesn’t mean bitcoin has no role. Over longer time horizons, it may still function as a hedge against currency debasement and excessive fiscal spending. But that’s a different thesis than “digital gold.”

Institutional Capital Keeps Backing Gold

The data reinforces gold’s institutional momentum. Holdings in gold-backed ETFs rose every month in 2025 except May, signaling sustained accumulation rather than speculative trading spikes. The SPDR Gold Trust, the world’s largest gold ETF, saw holdings increase by more than 20% this year alone.

Wall Street’s major banks are doubling down. Goldman Sachs projects gold could reach $4,900 per ounce in 2026 under its base case scenario, with upside risks outweighing downside risks.

What This Means for Investors

The 2025 performance gap between gold and bitcoin isn’t a temporary anomaly—it reflects fundamental differences in how these assets behave during periods of macroeconomic uncertainty. Until bitcoin develops the institutional infrastructure and central bank acceptance that gold enjoys, it will likely remain more sensitive to equity market swings and risk sentiment shifts.

For portfolio managers, the lesson is clear: gold and bitcoin serve different purposes. Treating bitcoin as a replacement for gold rather than a complementary hedge could mean missing protection exactly when you need it most.