Bitwise Chief Investment Officer: Why is gold performing far better than Bitcoin?

Original Title: Gold's Rise Bodes Well for Bitcoin

Original author: Matt Hougan

Source text:

Reprint: Mars Finance

Currently, there are two core questions regarding Bitcoin in the cryptocurrency market:

1. Why has the performance of gold prices far exceeded that of Bitcoin?

2. Since ETFs and companies are buying in large quantities, why is the price of Bitcoin still stagnant?

In fact, if the first question can be answered carefully, the answer to the second question will also emerge accordingly - and this answer paints a picture of great bullish potential for the future of Bitcoin.

Next, I will analyze in detail.

Question 1: Why has the performance of gold far exceeded that of Bitcoin?

Currently, although gold prices have slightly pulled back, they have surged rapidly this year, with an increase of 57% by 2025, heading towards the second-best annual performance in history when priced in US dollars. Meanwhile, Bitcoin has stagnated around the $110,000 mark, with prices roughly flat since May.

This frustrates investors who see Bitcoin as “digital gold,” but there is actually a simple explanation behind it: the differences stem from the actions of central banks in various countries.

Since the U.S. froze the Russian-held U.S. Treasury bonds following Russia's invasion of Ukraine, central banks around the world have begun to significantly increase their gold holdings. According to data from Metals Focus, central bank gold purchases have nearly doubled since the outbreak of the Russia-Ukraine war, rising from about 467 tons per year to around 1,000 tons now, which is approximately twice the estimated purchase volume of gold ETPs (exchange-traded products).

Bitcoin cannot enjoy this treatment. Although some central banks are researching Bitcoin, no central bank has actually purchased it yet. Therefore, if central banks are the main driver behind the recent rise in gold prices, it is logical that Bitcoin has not followed gold prices higher.

This viewpoint is not new. Institutions and individuals such as Morgan Stanley, JPMorgan, and Mohamed El-Erian have all pointed out that central bank gold purchases are a key driving factor behind the surge in gold prices.

Question two: Why is the Bitcoin price still stagnant despite large purchases by ETFs and companies?

What is the connection to the second question?

The answer is: highly correlated.

The biggest mystery in the Bitcoin market is why, despite ETFs and companies buying in large quantities, its price remains relatively stable. Since the launch of the Bitcoin ETF in January 2024, ETFs and companies have cumulatively purchased 1.39 million Bitcoins, while the new supply of Bitcoins on the network during the same period is less than a quarter of that scale. Although the price of Bitcoin has risen 135% since then, which is a solid performance, many are still wondering: shouldn't it have risen even higher?

I have also had the same question: who is dumping Bitcoin in large quantities? What is preventing it from breaking through the $200,000 mark?

The current rise in gold prices has provided the answer.

Please see the table below, which shows the annual gold purchases by central banks of various countries from 2010 to 2024. The central bank's gold purchases in 2021 were 467 tons, rising to 1080 tons in 2022, and have remained at this high level since then (forecasts indicate that demand in 2025 will be slightly lower than in 2024).

Central bank gold purchases by country from 2010 to 2024 (unit: tons):

In short, although central bank gold purchases have been an important catalyst for the rise in gold prices this year, such purchases did not begin this year but started in 2022.

This also provides an answer to the current situation of Bitcoin.

When the central bank started to significantly increase its gold purchases in 2022, the price of gold rose relatively slowly: the average price in 2022 was $1,800, rising to $1,941 in 2023 (an increase of only 8%), and to $2,386 in 2024 (an increase of 23%). It wasn't until this year that the price of gold experienced explosive growth, with an increase of nearly 60%, reaching around $4,200.

In other words: the central bank started buying gold in 2022, while the gold price only experienced a parabolic rise in 2025.

I think the logic of the situation is very clear: in any market, there is a portion of price-sensitive investors—these investors often take action when prices change by 10%-15%. When the central bank started buying gold in large quantities in 2022, driving up gold prices, these investors would seize the opportunity to sell gold as demand rose. However, ultimately, this selling pressure will be exhausted, and then the price will rise significantly.

I suspect that Bitcoin is currently in a similar phase.

As mentioned earlier, since 2024, when ETFs and companies began to buy in large quantities, the price of Bitcoin has increased by 2.3 times. During this period, price-sensitive holders will seize the opportunity to take profits and sell.

But as the example of gold prices shows, one day these selling pressures will run out. As long as the joint buying trend of ETFs and companies continues (which I believe is highly likely to continue), Bitcoin will welcome its “golden moment of 2025.”

My suggestion is: be patient.

Do not envy the surge in gold prices, but rather see it as a sign—it may be showing us the future direction of Bitcoin.