JPMorgan said that Bitcoin’s status as “digital gold” is weakening as the crypto lags behind the surging price of gold, which hit a record $3,167 earlier today.

The gold price traded down a little more than 1% at $3,124 at 10:31 a.m. EST after paring earlier gains, while Bitcoin slumped almost 4% to $82,219 after US Donald Trump unleashed a barrage of trade tariffs against the rest of the world yesterday.

Gold’s outperformance is proof that investors still favor the commodity over BTC in times of macroeconomic uncertainty, said JPMorgan analysts led by Nikolaos Panigirtzoglou in an April 2 report.

Risk assets are tanking after hours as Trump’s tariffs are worse than expected. Dow futures are already down over 1,000, which is 2.5%. S&P futures are down 4%, and NASDAQ futures are down 4.5%. Bitcoin is only down 3.5%. Gold, however, the true safe haven, hit a new record high.

— Peter Schiff (@PeterSchiff) April 2, 2025

The strategy of buying assets like gold and Bitcoin to hedge against inflation, weakening fiat currencies and long-term debt is known as the debasement trade.

The analysts went on to predict that this trend will persist, adding that they “see gold continuing to rise as the major beneficiary of the debasement trade.”

Bitcoin’s volatility and correlation with equities also raises questions over its ”digital gold’ narrative,” they added.

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The pattern of investors favoring gold over Bitcoin can also be seen in ETF (exchange-traded fund) flows, according to the JPMorgan analysts.

Spot Bitcoin ETFs have seen outflows over the past two months, which is in stark contrast to the continued inflows into gold ETFs, they said.

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Meanwhile, Bitcoin futures have also turned negative since January, while gold futures have remained relatively flat. This, according to the analysts, suggests that demand for gold is coming from private investors and central banks rather than speculative traders.

Frequently Asked Questions (FAQs)

1. Why is Bitcoin’s “digital gold” narrative under scrutiny? Bitcoin’s increasing volatility and its correlation with equity markets have raised questions about its reliability as a safe-haven asset, especially when compared to the steady performance of traditional gold.
2. What is the “debasement trade,” and how does it relate to Bitcoin and gold? The “debasement trade” refers to investors seeking assets like gold and Bitcoin to protect against inflation and weakening fiat currencies. Currently, gold is benefiting more from this trend due to its perceived stability.
3. How have ETF flows reflected investor preferences between gold and Bitcoin? Gold ETFs have seen significant inflows, indicating strong investor interest, while Bitcoin ETFs have experienced outflows, suggesting a shift away from Bitcoin in favor of gold.
4. What macroeconomic factors are influencing the shift from Bitcoin to gold? Factors such as global trade tensions, economic downturn concerns, and a declining U.S. dollar are prompting investors to seek the perceived safety of gold over the more volatile Bitcoin.
5. Is Bitcoin still considered a safe-haven asset? While Bitcoin was once viewed as a digital alternative to gold, its recent price swings and correlation with risk assets have led to doubts about its role as a safe-haven asset.
6. How has Bitcoin’s price performance compared to gold recently? Bitcoin has experienced significant fluctuations, while gold has reached record highs, reinforcing its status as a stable store of value during economic uncertainty.
7. What role do central banks play in the current preference for gold? Central banks have been increasing their gold reserves, contributing to its rising demand and price, and signaling confidence in gold’s long-term value.
8. Could Bitcoin regain its “digital gold” status in the future? If Bitcoin’s volatility decreases and it decouples from equity markets, it might restore investor confidence and reclaim its position as a digital store of value.
9. Are there other cryptocurrencies being considered as alternatives to Bitcoin for value storage? Some investors are exploring other cryptocurrencies like XRP, which have shown different performance patterns and may offer alternative value propositions.
10. What should investors consider when choosing between Bitcoin and gold? Investors should assess factors like volatility, market correlation, historical performance, and macroeconomic conditions to determine which asset aligns with their risk tolerance and investment goals.

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