Bitcoin vs. Gold: What's the Difference?
With current market uncertainty and the US dollar losing over 20% of its purchasing power in the last five years, many investors are seeking store-of-value assets to mitigate the impacts of fiat currency inflation and preserve their wealth over time.
One such asset is gold, a scarce precious metal that humanity has relied on as a long-term store of value for thousands of years. Beyond its use in jewelry and electronics manufacturing, investors often turn to gold in times of market instability to hedge against uncertainty and protect their wealth from devaluation.
Another increasingly popular store of value asset is Bitcoin (BTC). Created in the aftermath of the 2008 financial crisis, Bitcoin operates on a decentralised, permissionless, immutable, and resilient blockchain network. Its capped supply and halving mechanism, which reduces new BTC issuance by 50% approximately every four years, contribute to its deflationary properties. Often referred to as "digital gold," Bitcoin is seen as a hedge against inflation and financial market uncertainty, as well as a long-term store of value.
The fundamental difference between Bitcoin and gold stems from their very nature, with gold existing as a physical precious metal with natural scarcity and thousands of years of history, while Bitcoin functions as a digital currency with a limited supply of 21 million coins on a decentralized blockchain network established in 2008.
In this article, we will compare Bitcoin and gold across several aspects, including market performance, volatility, scarcity, and accessibility.
Bitcoin vs. Gold: The Ultimate Comparison
| Aspect | Bitcoin (BTC) | Gold |
|---|---|---|
| Market Performance | Extremely high growth (153M% since 2010), outperformed during most recoveries | Moderate growth (135.7% since 2010), historically stable and reliable |
| Volatility | More volatile (average 5-year volatility: ~44.6), though decreasing over time | Less volatile (average 5-year volatility: ~17.4), known for stability |
| Scarcity | Fixed supply: 21 million coins, enforced by code and halving every ~4 years | Naturally scarce, limited by mining on Earth, cannot be synthetically created |
| Accessibility | Easily accessible via internet, fast transactions, low fees, 24/7 trading | Physical gold has slower transactions, storage costs; ETFs and tokens offer easier access |
| Storage | Digital wallets (custodial or non-custodial), secure and convenient | Physical storage needed for bullion; ETFs/digital tokens offer alternative storage options |
| Use Cases | Digital store of value, hedge against inflation, growing institutional adoption | Traditional store of value, safe haven during uncertainty, used in jewelry & electronics |
We will explore Bitcoin and gold by evaluating their performance in market downturns, volatility, scarcity, and accessibility.
Market Performance
Both gold and Bitcoin have demonstrated impressive performance over the years. Since July 14, 2010 to February 25, 2025, BTC's price has surged an astounding 153,795,257%, whereas SPDR Gold Shares (GLD) increased by 135.70% over the same period. While Bitcoin is the clear winner in terms of growth, it is essential to note that gold already had a significant market cap in 2010, while Bitcoin's market capitalisation was just above $196,000 at that time.
Source: Yahoo Finance
Let's examine how Bitcoin and gold performed during key market downturns and crises that triggered mass sell-offs:
China stock market crash (June 2015 - February 2016): During this period, the S&P 500 (SPX) fell by 6.12%, while Bitcoin surged by 83.52% and gold rose by 3.98%.
The COVID-19 pandemic crash (February 20, 2020 - April 7, 2020): Gold was the only asset to provide positive returns during this crisis, gaining 2.8%. In contrast, the SPX dropped by 18.8% and Bitcoin by 23.9%. However, both Bitcoin and the SPX recovered by the end of 2020, with BTC soaring by 231.89% and the S&P 500 gaining 17.50%, surpassing gold's 9.29% increase.
Market downturn following the Russian invasion of Ukraine (February 24, 2022 - March 14, 2024): During this period, the SPX fell by 0.6%, while gold and Bitcoin recorded modest gains of 1% and 1.2%, respectively.
Terra collapse and FTX bankruptcy (May 7, 2022 - November 11, 2022): These events heavily impacted Bitcoin, leading to a 53.9% decline with no recovery by year-end. In contrast, the SPX fell by 4%, and GLD dropped by 6.2%.
A wave of banking collapses in 2023 (March 8, 2023 - November 12, 2023): During this period, Bitcoin grew by 64.3%, SPX by 10.7%, and gold by 6.5%, showing resilience across all three assets.
In summary, Bitcoin and gold outperformed the SPX in three out of five major market downturns over the past decade. If the recovery of 2020 is considered, Bitcoin outperformed the SPX four times out of five, while gold did so two times out of five.
Volatility
Bitcoin and gold exhibit different volatility patterns. Cryptocurrencies, in general, are more volatile than other asset classes, and BTC—despite having the largest market cap at $1.74 trillion—experiences more significant price swings than gold.
Source: TradingView
Gold, on the other hand, is known for its price stability and has historically been less volatile than stocks and other market assets. When comparing BVOL, GVZ, and VIX—which measure the 30-day volatility of Bitcoin, gold, and the S&P 500, respectively—over the past five years, gold shows the lowest average volatility at 17.40, followed by the SPX at 21.12, and Bitcoin at 44.60. However, over the past 365 days, the SPX led with a volatility of 16.05, closely followed by gold at 16.52, with Bitcoin at 20.37.
Bitcoin's reduced volatility (over 54%) suggests its maturation as an asset, driven by market capitalisation growth and an influx of institutional investors and possibly government adoption.
Scarcity
Bitcoin and gold are both scarce assets available in limited supply.
Gold is naturally limited to what can be mined on Earth. It can't be destroyed or synthetically produced, making its extraction complex and expensive.
In contrast, Bitcoin's scarcity is coded into its protocol. Its supply is capped at 21 million coins, which cannot be increased without the unanimous consent of every node and miner on the network. This design includes a halving mechanism that reduces Bitcoin's inflation rate by half approximately every four years, continuing until no more BTC is left to mine.
Accessibility
Bitcoin and gold are both highly liquid and easily accessible.
Bitcoin can be purchased using any internet-enabled device on centralised exchanges like VALR, decentralised exchanges, or peer-to-peer marketplaces. Transactions are quick, with competitive fees, instant settlement, and secure storage via non-custodial wallets. Access is unrestricted at the network level, although providers may have geographical, age, or verification requirements.
Physical gold, however, is bought and sold through gold dealers, with transactions often requiring multiple days to settle and incurring high fees. Secure storage can also add complexity and costs.
A more convenient way to gain exposure to gold is through stock market indices like the SPDR Gold Shares (GLD). These indices offer regulated access, high liquidity, and lower costs than physical bullion. However, investors face counterparty risks and management fees, with no physical ownership of gold. Alternatively, gold-backed tokens like Tether Gold (XAUt) provide exposure to gold prices with the benefits of cryptocurrency, including 24/7 trading, low fees, and non-custodial digital storage. These tokens are fully backed by physical gold on a 1:1 basis and can be redeemed for physical gold or cash.
Buy Bitcoin and Gold on VALR
Bitcoin and gold are two powerful store-of-value assets used to hedge against fiat inflation and market uncertainty. Gold has been a trusted safe haven for centuries, while BTC offers a modern alternative with its decentralised, deflationary properties and capped supply. Despite higher volatility, Bitcoin has shown remarkable price growth over the past decade.
To gain exposure to the precious metal, XAUt offers a secure and convenient way, combining the benefits of blockchain technology with physical gold backing. It allows 24/7 trading, low fees, and non-custodial storage.
Ready to hedge against market uncertainty? Buy BTC and XAUt on VALR today and diversify your portfolio with these store-of-value assets.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate. VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).
Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
