Gold Outperforms Bitcoin in 2025 as Investors Favor Defensive Assets
In 2025, gold rose about 70% while bitcoin declined roughly 6%, highlighting a sharp divergence between the two assets. The crypto market experienced a significant sell-off in October when leveraged bitcoin holders dumped into a thin market following a Trump tariff threat toward China, causing the cryptocurrency market to lose over $1 trillion in value within six weeks. Bitcoin's price dropped from a high near $126,000 in early October to around $87,000 by December.
Deutsche Bank identified five key factors behind bitcoin's downturn: broader risk-off sentiment, hawkish signals from the Federal Reserve, weaker regulatory momentum, thin liquidity combined with institutional outflows, and profit-taking by long-term holders. Unlike earlier retail-driven crashes, this drop occurred amid substantial institutional participation and macroeconomic trends, and the market's stabilization remains uncertain.
Investors increasingly favored gold and silver as defensive hedges throughout 2025, with silver performing even better than gold. Bitcoin is now more widely treated as a mainstream asset; major institutions like JPMorgan and BlackRock refer to it as a regular asset, crypto ETFs have been marketed by mainstream firms, and the UK regulator has proposed crypto-market regulations.
Despite this, questions remain about the real depth of the bitcoin market and its imitators, as the speculative buzz surrounding bitcoin has diminished. Meanwhile, the IMF projects that US debt will rise from 125% to 143% of annual income by 2030, surpassing the debt levels of Greece and Italy.
