Bitcoin's status as a protective asset is undergoing a reality check
Gold is demonstrating its dominance as a crisis asset, while bitcoin is struggling to hold its ground. This comes against a backdrop of rising geopolitical risks, a widening US budget deficit and uncertainty causing capital outflows.
"According to a recent Bank of America survey, 58% of fund managers said gold performs best during a trade war. By comparison, 30-year Treasuries are favored by 9% and bitcoin by just 3%," notes The Kobeissi Letter.
For years, bitcoin's proponents have extolled it as a hedge against economic instability. However, in the volatile macroeconomic environment of 2025, bitcoin is struggling to gain the full confidence of institutional investors.
A Bank of America survey reflects this situation: long-term U.S. Treasuries and even the U.S. dollar are losing appeal amid trade wars and fiscal dysfunction that are undermining market confidence.
The U.S. budget deficit is approaching a record $1.8 trillion, raising serious concerns among investors and analysts. This growing imbalance between federal government revenues and spending is undermining confidence in traditional protective assets, including U.S. Treasuries, which were once considered virtually risk-free investments.
"This is what happens when the world's reserve currency stops behaving like the world's reserve currency," noted one trader on social network X.
However, instead of turning to bitcoin as an alternative, institutions are favoring gold, increasing physical purchases of gold to record levels.
Obstacles to institutional adoption of bitcoin
Despite limited supply and decentralization, bitcoin's short-term volatility remains a key barrier to its institutional adoption as a true protective asset.
Gold provides the necessary level of stability and liquidity during periods of market turmoil, making it an attractive hedge during crises. Bitcoin, on the other hand, lacks these qualities, despite its potential as a long-term savings vehicle.
Additionally, President Trump is expected to announce sweeping new tariffs on "Emancipation Day" on April 2, an event experts point to as a potential trigger for extreme market volatility.
"April 2 is comparable to election night. It's the biggest event of the year, an order of magnitude bigger than any Federal Open Market Committee (FOMC) meeting, which is considerable. And anything can happen," predicts Alex Krüger.
Trade tensions have historically channeled capital into defensive assets. In anticipation of this announcement, investors are taking positions in advance, favoring gold over bitcoin.
"Gold is no longer just a protection against inflation; it is seen as a protection against everything: geopolitical risk, de-globalization, fiscal dysfunction and now also trade wars. When 58% of fund managers say gold is the best asset during a trade war, it's not just sentiment, it's capital flow. When even long-term bonds and the dollar are being sidelined, it's a signal: the old script is being rewritten. In a world of rising tariffs, currency tensions and twin deficits, gold may be the only politically neutral means of preserving value," noted trader Billy AU.
For bitcoin followers, the key question is not whether bitcoin will ever challenge gold, but how long institutional investors will see the precious metal as a protective asset.
For now, gold remains the undisputed king in times of economic turmoil, while bitcoin (bitcoin ETFs) is still struggling to find its place in the financial paradigm.
"The demand for ETFs has been real, but some of it has been purely for arbitrage... Real interest in acquiring BTC does exist, but its scale has been much more modest than previously thought," summarized analyst Kyle Chassé.
