Bitcoin vs. Gold in a Geopolitical and Liquidity-Driven World: Sovereign and Individual Preferences in Times of Crisis and Monetary Expansion

In a world defined by geopolitical volatility and relentless monetary expansion, the age-old debate between Bitcoin and gold has taken on new urgency. Central banks and individual investors are navigating a landscape where traditional safe-haven assets are being tested against digital alternatives. This article dissects how sovereign and individual preferences diverge-and occasionally converge-when allocating capital between Bitcoin and gold during crises and periods of liquidity-driven policy.

Sovereign Preferences: Gold's Enduring Allure vs. Bitcoin's Skepticism

Central banks have long treated gold as a cornerstone of their reserve portfolios. During the 2020–2025 period, geopolitical tensions-from U.S.-China trade wars to regional conflicts-spurred a surge in gold purchases. For instance, the Central Bank of the Republic of Türkiye (CBRT) added $772 million in gold reserves in a single week amid political instability, underscoring gold's role as a stable store of value, according to Turkish central bank reserves post largest weekly decline since May 2023. This trend aligns with broader global dynamics: the U.S. public debt ballooned to $36 trillion (123% of GDP) by 2025, pushing nations to diversify away from dollar-denominated assets, as noted in Bitwise's analysis of Bitcoin vs. gold.

Bitcoin, however, remains a fringe consideration for most central banks. The Swiss National Bank (SNB) explicitly rejected Bitcoin as a reserve asset in 2025, citing its volatility and liquidity risks, according to Kitco's coverage. While some analysts argue Bitcoin's scarcity and decentralization make it a modern hedge against inflation, central banks prioritize proven stability. Gold's historical role as a crisis asset-bolstered by its physical tangibility and centuries-old track record-continues to outpace Bitcoin's digital novelty.

Individual Preferences: Gold's Safe-Haven Dominance and Bitcoin's ETF Breakthrough

For individual investors, the story is more nuanced. During geopolitical crises, gold has consistently outperformed Bitcoin. A Bank of America survey revealed that 58% of fund managers view gold as the best-performing asset during trade wars, while only 3% favor Bitcoin, as noted in CoinPaper's analysis. Gold's liquidity and psychological appeal-rooted in millennia of cultural trust-make it a default choice when markets panic.

Yet Bitcoin's institutional adoption has surged via ETFs. JPMorgan, for example, increased its Bitcoin ETF holdings by 64% in Q3 2025, reaching $343 million, according to Coinpaprika's report. BlackRock's iShares Bitcoin Trust (IBIT) now manages $50 billion, reflecting growing demand for crypto exposure without the complexities of direct custody, as reported in Bitwise's analysis. This growth is driven by Bitcoin's unique properties: its 21 million supply cap and low correlation with U.S. Treasuries make it an attractive diversification tool, as noted in Bitwise's analysis.

However, Bitcoin's volatility remains a hurdle. While it aligns with global liquidity trends 83% of the time, its price swings during crises-such as the 2024 "Trump Tariff Chaos"-have left many investors wary, as noted in Lynalden's analysis. Gold, by contrast, retains its luster even as speculative narratives fade, as noted in Real Investment Advice.

Liquidity and Monetary Expansion: Bitcoin as a Barometer, Gold as a Buffer

Monetary expansion has amplified the divergence between the two assets. Bitcoin's price has shown a strong directional alignment with metrics like M2 money supply, making it a barometer for liquidity shifts, as noted in Lynalden's analysis. Each Halving event (2020, 2024, 2028) has further reinforced its scarcity narrative, driving rallies amid inflationary expectations, as noted in Bitwise's analysis.

Gold, meanwhile, benefits from both liquidity and geopolitical uncertainty. A weaker U.S. dollar and rising global debt levels have fueled demand, though its liquidity is less directly tied to monetary policy, as noted in Real Investment Advice. During the 2020–2025 period, gold's price rallies were often accompanied by sharp drawdowns, highlighting the need for strategic positioning, as noted in Capital Flows Research.

Conclusion: A Portfolio for the Future

The Bitcoin vs. gold debate is not a zero-sum game. Sovereigns and individuals are increasingly recognizing the complementary roles of these assets. Gold offers stability and liquidity during crises, while Bitcoin's scarcity and growth potential make it a compelling hedge against inflation and sovereign debt risks. As central banks cautiously expand systems like New Zealand's Exchange Settlement Account System, according to Reuters coverage, and individual investors gravitate toward ETFs, the future of asset allocation will likely involve a balanced approach-leveraging gold's time-tested resilience and Bitcoin's digital innovation.