Bitwise Chief Investment Officer: Why Has Gold Outperformed Bitcoin by So Much?
Original Title: Gold's Rise Bodes Well for Bitcoin
Original Author: Matt Hougan, Chief Investment Officer at Bitwise
Original Translation: Golden Finance
The current crypto market has two major questions regarding Bitcoin:
1. Why has the price of gold outperformed Bitcoin by far?
2. Despite ETFs and corporate buying, why has the price of Bitcoin remained stagnant?
In fact, if we can carefully answer the first question, the answer to the second question will also become apparent — and this answer paints an extremely bullish picture of Bitcoin's future.
Next, I will provide a detailed analysis.
Question One: Why Has the Price of Gold Outperformed Bitcoin?
Currently, despite a slight pullback, the price of gold has seen a rapid rise this year, with a 57% increase so far in 2025, heading towards its second-best annual performance in US dollar terms. Meanwhile, Bitcoin has been stuck around the $110,000 mark, remaining relatively flat since May.
This has frustrated investors who see Bitcoin as "digital gold," but there is actually a simple explanation behind this: the difference stems from the actions of central banks around the world.
Since the US froze Russian-held US Treasuries after Russia's invasion of Ukraine, central banks around the world have begun heavily increasing their gold holdings. According to data from Metals Focus, central banks' gold purchases have nearly doubled since the outbreak of the Russia-Ukraine war, from around 467 tons per year to about 1000 tons now, a scale roughly twice the estimated purchase volume of gold ETPs (Exchange-Traded Products).
Bitcoin has not been able to enjoy this treatment. While some central banks are researching Bitcoin, none have actually made purchases. Therefore, if central banks are the primary driver of this gold price surge, it is logical that Bitcoin has not followed the rise in the price of gold.
This view 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: Despite ETFs and corporate buying, why has the price of Bitcoin remained stagnant?
How is this related to the second question?
The answer is: very relevant.
The biggest mystery in the Bitcoin market is that, despite ETFs and corporations buying in large quantities, its price remains relatively stable. Since the launch of the Bitcoin ETF in January 2024, ETFs and corporations have accumulated 1.39 million bitcoins, while the additional supply of the Bitcoin network during the same period is less than a quarter of this amount. Although the price of Bitcoin has risen by 135% since then, performing well, many people are still wondering: shouldn't it have risen even higher?
I had the same question: who is selling off Bitcoin in large quantities? What is preventing it from breaking through the $200,000 mark?
The current rise in the price of gold provides the answer.
Take a look at the table below, which shows the annual gold purchase volume of central banks from 2010 to 2024. Central bank gold purchases in 2021 were 467 tons, rising to 1,080 tons in 2022, and then remaining at this high level (forecasts indicate that demand in 2025 will be slightly lower than in 2024).
Central Bank Gold Purchase Volume from 2010 to 2024 (unit: tons):
Source: World Gold Council
In short, although central bank gold purchases have been a significant catalyst for this year's rise in gold prices, this type of purchase did not start this year but began in 2022.
This also provides an answer to the current situation of Bitcoin.
When central bank gold purchases began to increase significantly in 2022, the rate of increase in the price of gold was relatively slow: the average price in 2022 was $1,800, rising to $1,941 in 2023 (only an 8% increase), and reaching $2,386 in 2024 (a 23% increase). It wasn't until this year that gold prices experienced an explosive surge, rising by nearly 60% to about $4,200.
In other words: central banks started buying gold in 2022, and the price of gold did not experience parabolic growth until 2025.
I think the logic of the situation is clear: in any market, there is a part of investors sensitive to price—they often take action when the price rises or falls by 10%-15%. When central banks started buying gold in large quantities in 2022, driving up the price of gold, these investors took advantage of the rising demand to sell off gold. However, eventually, this selling pressure will be exhausted, and the price will then rise significantly.
I suspect Bitcoin is currently in a similar stage.
As mentioned earlier, since 2024 when ETFs and corporations began buying in bulk, the price of Bitcoin has risen 2.3x. During this period, price-sensitive holders took the opportunity to sell and exit.
But as the example of gold has shown, there will come a day when these selling pressures will be exhausted. As long as the joint buying trend of ETFs and corporations continues (which I believe is highly likely), Bitcoin will experience its own "2025 Gold Moment."
My advice is: Be patient.
Do not envy the sudden rise in gold price, but see it as a sign—it may be showing us the future path of Bitcoin.
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