How did gold vs. bitcoin become the Judge vs. Ohtani or Brady vs. Manning of stock market debates?
Sure, both are technically forms of currencies, but not the kind you can use to buy groceries or take your kids to the movies. And yes, you can invest in either of them through a number of vehicles. But that’s about where the similarities end.
Gold vs. Bitcoin: A Breakdown
Gold is a physical asset, mined from the earth, that was once the world’s primary currency (hence the term, “the gold standard”) but now acts as a reserve currency held by governments around the world. Last year it surpassed the euro as the second-largest reserve currency in the world behind the U.S. dollar.
In the investment world, gold has other uses. It has long acted as a safe haven in times of economic or market uncertainty. Gold is also a hedge against weakness in the U.S. dollar. For those two reasons – a sinking U.S. dollar (off 9% in 2025) and tremendous economic and geopolitical turmoil thanks to things like tariffs, inflation, high interest rates and war – gold has soared to new heights in the past year, topping $5,000 an ounce for the first time ever.
Bitcoin? Not so much. The digital currency has lost 30% of its “value” in the last year and has plummeted from all-time highs above $126,000 in early October to roughly $68,000 now and as low as $60,000 earlier this month – a 50% haircut in just four months. Yikes!
Why has bitcoin suddenly imploded? Because it’s the opposite of gold. Bitcoin is not a dollar hedge. In fact, its recent nosedive coincided with the dollar falling to a four-year low in late January. Unlike gold, bitcoin is not a reserve currency, and it’s not something that can fit nicely on a ring finger, stow under a mattress for the Apocalypse, or use to decorate the Oval Office. It’s almost entirely a bull market play.
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When stocks – and growth stocks in particular – are humming, bitcoin typically soars. In fact, spikes in the price of bitcoin often presage big market runs.
To wit: The first monster rally in bitcoin occurred in 2017, when the price went from under $1,000 to start the year to more than $14,000 by that November. That year, the S&P 500 gained more than 19%.
The following year, however, stocks tumbled 6.42%. Bitcoin prices cratered, falling all the way back to the $3,000 range by year’s end.
The next major high in bitcoin came in 2021, when stocks came roaring back from the Covid crash, fueled by government stimulus checks and lots more time spent online. By September of 2021, bitcoin prices had topped $60,000, peaking a couple months before the Nasdaq’s November 2021 pinnacle and three months before the S&P’s December apex.
Here are a few other bitcoin tops and bottoms, and how they corresponded with the market:
- November 2022: Bitcoin bottoms at $16,000, signaling an end to the 11-month bear market in stocks
- March 2024: Bitcoin reaches new heights above $70,000, coinciding with record highs in the S&P 500
- April 7, 2025: Bitcoin dips to $76,000 – a day before the market bottom on the heels of “Liberation Day”
- October 5, 2025: Bitcoin surges to new all-time highs above $126,000 … three weeks before the market tops out at new record highs.
Interestingly, bitcoin prices being slashed in half in the four-plus months since that top has not coincided with another collapse in stock prices – at least not yet. Instead, it’s run parallel to sort of sideways action in stocks … and a relentless surge in gold prices. That’s right: bitcoin and gold have gone in total opposite directions the last four months. And that’s often the case.
As you can see from the chart below (courtesy of NewHedge), Bitcoin prices and stock prices typically (though less so lately) rise and fall in tandem …
On the other hand, here’s what a 15-year chart of gold and the S&P 500 looks like (courtesy of Stockcharts.com) …
Notice that, normally, when stocks (red line) implode (2020, 2022), gold (blue line) either thrives or mostly holds firm. Conversely, when stocks soar, like from 2011-2015, gold wallows … usually. The past two years, of course, have been an exception – with both stock prices and gold prices rising to record highs. A combination of falling interest rates, a weakening dollar, and a resilient economy despite plummeting sentiment about the economy has conspired to send both asset classes marching higher in lockstep – a historical rarity.
We’ll see how much longer the two rallies can last. My colleague Clif Droke, a gold and metals expert, insists that – eventually – one of the must fold. Gold and stocks almost never rise together for very long.
But back to my original point … gold vs. bitcoin is not even a comparison. Bitcoin is not a safe haven, gold is not a bull market play, despite its recent ascent in the midst of a bull market in stocks. Over time, gold is most certainly the safer investment; it is, after all, a real asset with centuries of history and utility in the global economy. Bitcoin is still more of a concept than a true asset.
In risk-on investment environments, like during the first year or two of the current artificial intelligence boom, or during the meme stock frenzy of 2021, bitcoin can act as almost a leveraged fund that serves as a force multiplier for stock investors to maximize their profits. But it’s more of a trade. Not a long-term investment. It’s not worth all the extreme highs and lows.
So if gold vs. bitcoin is more of an argument than a comparison (again, it shouldn’t be), consider me a gold bug – and this isn’t just recency bias. Over time, gold is the much steadier, more reliable asset. It might not net you the same kind of microwaved “instant” profits bitcoin can if you time it right. But gold also won’t make you poor overnight.
If I’m being really honest though? Stocks are a better long-term investment than either gold or bitcoin. And that’s why Cabot has been recommending them for more than half a century. To invest alongside us, click here.
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