[SINGAPORE] As US President Donald Trump’s eye-watering tariffs triggered a tanking of the world’s markets in the past week, the paths of two alternative assets diverged.
One was gold, which recorded a new high of US$3,132.43 per ounce, then faltered during the extreme sell-offs, and then rose back to above US$3,100 on Thursday (Apr 10). The other, cryptocurrencies, joined the global market rout, with Bitcoin sinking 28 per cent lower than its January peak.
But prior to the recent volatility, crypto – especially Bitcoin – was seen as a potential challenger to gold’s long-held role as a store of value.
Ilan Solot, senior global markets strategist of Marex, says: “At this point, Bitcoin is probably best thought of as an emerging store-of-value asset which – for those who believe in it – can be acquired at an early stage in its maturity cycle.”
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He adds, however, that the recent plunge in crypto prices shows its high correlation with the equity market during times investors are risk-averse – which makes it unlike gold.
Gold and cryptocurrencies are sometimes compared to each other because they are alternative assets that offer hedges against inflation and traditional market shocks, and because they share characteristics such as scarcity and the potential to hold value over time.
Investors concerned about counterparty risks would note that both assets allow for self-custody, independent of any single entity; they are also viewed as cushions against traditional, centralised financial systems’ risk of collapse.
Here’s how they compare:
How much gold and Bitcoin are out there?
Gold is a rare metal that presents only in small amounts in the earth’s crust. Bitcoin, designed to mimic gold in the digital age, is capped at only 21 million coins by the algorithm.
As of end-2024, the amount of total above-ground gold stood at 216,265 tonnes. Based on the spot gold price of US$3,033.07 an ounce in Asian morning trade on Thursday, the world’s mined gold is worth US$23.8 trillion. In comparison, the total worth of the world’s cryptocurrencies stands at US$2.6 trillion.
The limited supply of cryptocurrencies offers a “shield against inflation and irresponsible monetary or fiscal policy”, says Marex’s Solot, adding that this trait attracts investors concerned about fiat currency risks, geopolitical tensions and capital controls in emerging markets.
Lasanka Perera, chief executive officer of Independent Reserve (the first cryptocurrency exchange licensed by the Monetary Authority of Singapore), notes that although Bitcoin is a computationally scarce asset, it is easy to acquire, store and transfer across borders at any time. These attributes give it a “massive advantage” in the race to be regarded as “digital gold” in a global and digital economy.
Charu Sethi, president of NFT (non-fungible token) infrastructure Unique Network sees a positive future for the blockchain industry because of its “intrinsic value”, despite the current volatility of cryptocurrencies.
“I really look forward to what comes out of Trump’s industry-forward regulations after the phases of volatility amid speculations,” she adds.
What is the implication of a Bitcoin reserve?
While gold has established itself as a safe-haven asset, crypto is often seen as the opposite.
The Trump administration’s setting up of the digital asset reserve “massively boosted crypto’s credibility”, says Independent Reserve’s Perera. “It’s a signal to investors that governments might treat Bitcoin like a commodity or reserve currency, not just a speculative asset class.”
However, while the move legitimises Bitcoin, boosts investor confidence and puts pressure on foreign entities to adopt a similar stance, it could well dent crypto’s appeal of being decentralised; critics are concerned about governmental control and perception of the industry, says Marex’s Solot.
He adds: “The way in which the reserve was announced got mixed reactions, especially after Trump and (his wife) Melania launched meme coins, possibly tainting crypto as a more speculative, rather than an investment, asset.”
In 2024, gold delivered a robust 26 per cent return, outpacing traditional assets. Bitcoin’s price, on the other hand, rose by more than 130 per cent. While this raised questions about whether it is an instrument of investment or speculation, it is noteworthy that one key price driver came from the US market regulator’s approval for Bitcoin exchange-traded funds (ETFs) tied to its spot prices.
Gold ETFs vs crypto ETFs
Crypto ETFs, like bullion-back ETFs that offer exposure to gold without the hassle of storing physical bullion, offer convenient exposure to the digital asset without the need for managing wallets or private keys.
And with many wealth managers being barred from dealing directly with crypto, investing into ETFs has become an easy way to diversify their client investors’ portfolios.
“The approval of spot Bitcoin ETFs opened the door for institutional investors, and that’s bringing in serious capital,” says Independent Reserve Singapore’s Perera.
Since their January 2024 launch in the US, spot cryptocurrency ETFs have broken records that gold ETFs never managed to set.
“Bitcoin ETFs amassed US$65 billion in assets under management within their first year, with BlackRock’s iShares Bitcoin Trust alone reaching US$50 billion by March 2025. It took gold ETFs years to achieve this,” notes Solot.
He adds that both gold and crypto-backed ETFs are now competing for portfolio diversification roles. However, they do attract different types of investors: “Crypto ETFs appeal to younger, risk-tolerant investors (Gen Z and millennials) and institutions seeking digital exposure. Gold ETFs typically draw traditional, risk-averse investors.”
However, after a good run in 2024, crypto-backed ETFs started to see outflows this year. Net outflows stood at US$1.6 billion in March, following the exodus of US$3.2 billion in February, and US$5.6 billion in January.
Bullion-backed ETFs have, on the other hand, enjoyed positive inflows since December 2024: US$3 billion in January, US$9.4 billion in February, and US$8.6 billion in March.
Fan Shaokai, World Gold Council’s head of Asia-Pacific (ex China) and global head of central banks, says the policy uncertainty around the slate of US tariffs and interest rate prospects are pushing investors towards bullion-backed ETFs.
The flow divergence between the two types of ETFs reflect a fundamental difference between their demand drivers: Gold ETFs attract investors seeking a hedge against market volatility amid strong central banks’ purchases; crypto ETFs pull in those who prefer a short-term game.
The significant outflows from crypto ETFs are a “natural” profit-taking from the “high-beta, volatile assets”, notes Phillip Nova’s senior market analyst Priyanka Sachdeva.
She says: “With the (crypto) market potentially cooling off or becoming more uncertain, investors may be reallocating funds into safer assets like gold, or locking in profits after the rally… It reflects a more cautious approach to the continued volatility in the crypto space.”
Jupiter Zheng, partner of liquid fund and research at HashKey Capital, a Hong Kong-headquartered institutional asset manager specialising in blockchain and digital assets, thinks crypto ETFs’ outflows are temporary if Bitcoin rallies again.
He says: “A significant amount of money in crypto ETFs is engaged in arbitrage between CME (The Chicago Mercantile Exchange) Bitcoin futures and Bitcoin spot ETFs.”
This means that many investors in crypto ETFs are not just holding Bitcoin for the long term, but playing a short-term arbitrage game between Bitcoin futures traded on CME and spot Bitcoin ETFs that hold actual Bitcoin.
When Bitcoin futures trade at a higher price than the spot price, traders can profit by buying spot Bitcoin ETFs and selling futures contracts, driving demand for crypto ETFs.
“Recently, the futures premium hit a 1.5-year low, comparable to levels in October 2023. This outflow of arbitrage funds poses a substantial issue for crypto ETFs,” says Zheng.
He suggests that with funds from futures-spot arbitrage drying up, traders are exiting their positions, creating outflows from crypto ETFs. But if Bitcoin prices rebound, the ETF market would liven up with a return of arbitrage activities and a fresh infusion of capital.
Would crypto replace gold in any sense?
Digital assets are gaining market recognition under the Trump’s administration’s pro-crypto policy setup and rising institutional adoption of crypto ETFs, coming on top of its digital nature resonating with a younger generation of investors.
Software developer Daniel Khoo, 31, has been a gold investor for 13 years, and has diversified his portfolio with crypto since 2019. He is positive about Bitcoin’s long-term value, and optimistic about its potential to replace gold, given its head-currency nature and self-custody function.
His one caveat: It has to prove its strength in a baptism of fire.
“It needs to survive a large financial crisis, to be sure, but it’s in a very good place, because, ultimately, I think it’s a generational thing,” he says, adding that Bitcoin, created in 2009, has yet to have a chance to prove itself.
Marex’s Solot notes that crypto, with its own price drivers and defensive strengths, is riding a broader wave of momentum as traditional financial actors like BlackRock become greater participants.
Manvinder Singh, managing director of Taurus Wealth, which offers portfolio-management services to single family offices, accredited corporates and high-net-worth individuals, has also noticed a rising number of institutional investors showing interest in crypto.
However, World Gold Council’s Fan highlights that the similarities between gold and crypto are “superficial”.
“Gold is a time-tested, safe-haven asset that exhibits minimal correlation to many other asset classes, making it an excellent portfolio diversifier during normal market conditions, as well as a crucial shock absorber during periods of stress and uncertainty,” he says. Cryptocurrencies, on the other hand, are often more correlated to positive risk sentiment, he adds.
Taurus Wealth’s Singh highlights that counterparty and custody risks associated with crypto, given its unregulated nature – which the industry is trying to address – remain investors’ concerns.
“I also find it challenging to fundamentally evaluate the true value of a digital asset,” he says.
SE Asia Consulting’s director Spencer Campbell notes that crypto’s unregulated nature gives financial institutions and regulators the right to freeze funds from crypto transactions if the sources of such funds are questionable.
“That, in part, is what gives me the most sleepless nights when it comes to crypto trading,” says Campbell, whose portfolio is overweight on precious metals.
Retail investor Khoo, whose portfolio includes gold and crypto in equal weights, notes that it is important to differentiate between Bitcoin and other cryptocurrencies, which bear higher risks and are like “tech penny stocks” favoured by short-term investors.
So what does it mean for investors’ portfolios?
“Gold and crypto are not substitutes for each other and, in many cases, may even complement each other in a portfolio,” says World Gold Council’s Fan.
Phillip Nova’s Sachdeva shares this view. She notes that despite both serving as hedges against uncertainty, they do so in different ways: “Gold has its timeless allure and proven record performance against economic downturns, but Bitcoin can act as a high-beta hedge, particularly in environments of de-dollarisation.”
She adds: “Going forward, if inflation persists or stalls, both assets could perform well and could certainly co-exist in a diversified portfolio – gold for reliability, and Bitcoin for asymmetric upside… For investors, maintaining a diversified portfolio that balances the stability of gold with the growth potential of cryptocurrencies is advisable.”
But with crypto’s evolving regulatory landscape and volatility remaining concerns, investors would do well to track regulatory developments and market trends so they can make informed decisions, she says.
