Why is Bitcoin failing in the role of a "safe haven" compared to gold?

In theory, bitcoin is expected to benefit during unstable periods due to its characteristics as a scarce and hard-to-censor form of currency. However, in reality, it is often the asset that investors sell first when pressure increases.

Over the past week, geopolitical tensions escalated following President Donald Trump’s statements about potential tariffs on NATO allies related to Greenland, along with rumors of military actions in the Arctic region. Financial markets adjusted collectively, and volatility increased.

Since January 18 — the day Trump first threatened tariffs in an effort to push the Greenland issue — bitcoin has decreased by 6.6% in value, while gold has risen by 8.6%, approaching new highs around $5,000.

The reason lies in the roles of different assets within an investment portfolio during times of market stress. Bitcoin trades 24/7, has high liquidity, and can be converted instantly, making it the easiest asset to sell quickly when investors need to raise cash.

In contrast, gold, though less flexible in trading, is usually held rather than sold. This makes bitcoin act like an “ATM” during panic phases, weakening its image as “digital gold,” according to Greg Cipolaro, Global Research Director at NYDIG.

“In times of stress and uncertainty, liquidity demand takes precedence, and this dynamic disadvantages bitcoin more than gold,” Cipolaro said.

He added that although bitcoin has good liquidity relative to its size, it still experiences more volatility and is often sold reflexively when leveraged positions are unwound. Therefore, in risk-averse environments, bitcoin is often used to increase cash holdings, reduce portfolio risk, and lower VAR (Value at Risk) metrics, despite long-term narratives. Meanwhile, gold continues to serve as a “liquidity sink.”

Large investors are also not supporting bitcoin at this time.

Central banks worldwide are buying gold at record speeds, creating a strong structural demand. Conversely, according to NYDIG reports, long-term bitcoin holders are selling.

On-chain data shows that “long-term” coins continue to be transferred to exchanges, indicating a stable supply being sold. This hanging supply weakens price support. “The opposite is happening with gold. Major holders, especially central banks, are still accumulating precious metals,” Cipolaro said.

The mismatch also stems from how the market prices risk. Current volatility is seen as temporary, driven by tariffs, policy threats, and short-term shocks. Gold has long served as a hedge against this kind of instability.

In contrast, bitcoin is more suitable for long-term risks such as fiat devaluation or sovereign debt crises.

“Gold is effective during moments of immediate loss of confidence, war risks, and currency devaluation, but before systemic collapse,” Cipolaro explained.

“Meanwhile, bitcoin is more appropriate for hedging against long-term monetary and geopolitical turmoil, along with erosion of trust that occurs over many years rather than weeks. As long as the market perceives current risks as dangerous but not systemic, gold will remain the preferred hedge.”