Bitcoin's Market Competitiveness and Valuation Metrics: A Macroeconomic and Store-of-Value Analysis

In the evolving landscape of global finance, Bitcoin's emergence as a store of value (SoV) has sparked intense debate. By 2025, Bitcoin's SoV Index has surged 85% to $1.03 trillion, reflecting its growing institutional adoption and acceptance as a digital alternative to traditional assets like gold, according to a CoinGecko report. Yet, this ascent is not without challenges. As macroeconomic conditions shift and regulatory frameworks evolve, Bitcoin's competitiveness against gold-and its role in diversified portfolios-remains a critical question for investors.

Store of Value: Bitcoin vs. Gold

Gold has long been the benchmark for SoV assets, with its price rising steadily from $1,400/oz in 2020 to $3,400/oz in 2025, per a Tiger Research report. Its appeal lies in its tangibility, historical resilience, and low correlation with equities (typically below 0.15). In contrast, Bitcoin's SoV narrative is defined by its digital scarcity and programmable nature. While its 5-year cumulative return of 953% dwarfs gold's 100%, Bitcoin's volatility-marked by drawdowns of up to 80%-poses a stark contrast to gold's 15% maximum drawdown, as noted in Tiger Research's analysis.

Institutional adoption has been a game-changer for Bitcoin. U.S. spot Bitcoin ETFs, approved in 2024, have accumulated 1.29 million BTC (6% of total supply), signaling a shift toward mainstream acceptance, the CoinGecko report observed. Meanwhile, gold's institutional demand remains stable but unremarkable, with central banks and sovereign wealth funds continuing to hoard physical bullion.

However, Bitcoin's correlation with risk assets is rising. Its 2025 correlation with the S&P 500 hit 0.86, up from 0.75 in 2024, suggesting it is increasingly behaving as a "risk-on" asset rather than a traditional safe haven. Gold, by contrast, maintains its inverse relationship with equities, offering diversification benefits during market stress, according to Tiger Research.

Macroeconomic Drivers and Bitcoin's Valuation

Bitcoin's price is inextricably linked to macroeconomic variables. A 2025 Vector Auto-Regression (VAR) model analysis reveals that U.S. Federal Funds Rate, GDP growth, and M2 money supply are key drivers, based on a Bitcoin Magazine analysis. For instance, the Fed's dovish pivot in 2025-cutting rates by 25 basis points in September and signaling two more cuts-has injected liquidity into alternative assets, with Bitcoin as a primary beneficiary, as reported by CNBC in its coverage of the Fed decision (September 2025) CNBC report.

Global liquidity trends further bolster Bitcoin's case. The M2 money supply has exceeded $90 trillion, with central banks like the Fed, ECB, and PBOC expanding their balance sheets, according to MacroMicro data (Global M2 series) MacroMicro data. This monetary inflation has eroded fiat purchasing power, making Bitcoin's fixed supply of 21 million coins increasingly attractive. On-chain metrics reinforce this narrative: the Network Value to Transactions (NVT) ratio is at a "golden cross" of 1.51, and the Stock-to-Flow (S2F) model projects prices ranging from $248K to $369K, figures cited in CNBC's Fed coverage.

Yet, Bitcoin's valuation is not immune to macroeconomic headwinds. Its strong correlation with equities (0.86 in 2025) exposes it to equity market volatility, a trend highlighted by the CoinGecko report, while regulatory uncertainty-particularly in the U.S.-remains a wildcard.

Valuation Metrics and Institutional Accumulation

Bitcoin's post-halving supply dynamics are tightening its float. As of Q3 2025, 74% of circulating BTC is illiquid, and 75% of coins have been dormant for over six months, statistics reported around the Fed rate decision coverage. This scarcity premium, combined with institutional buying, has driven prices higher. MicroStrategy's accumulation of 629,376 BTC alone underscores corporate treasuries' growing appetite for Bitcoin as a hedge, a trend discussed in Tiger Research's Q3 report.

On-chain indicators like the MVRV Z-Score (1.43) and Value Days Destroyed (VDD) metrics suggest the market remains in a bull cycle, with long-term holders accumulating during pullbacks, per Bitcoin Magazine's on-chain review. Meanwhile, Tiger Research's Q3 2025 report projects a price target of $190,000, citing record liquidity and institutional adoption.

Future Outlook: Competing with Gold in a Maturing Market

While gold's 45% year-to-date gain in 2025 outpaces Bitcoin's 20% return, historical patterns suggest Bitcoin could close this gap by year-end, particularly during its traditionally strong October–November period, as observed in the CoinGecko report. However, gold's $26 trillion market cap dwarfs Bitcoin's $2.2 trillion, reflecting its entrenched role in global portfolios, also noted by CoinGecko.

Regulatory clarity will be pivotal. The U.S. Securities and Exchange Commission's (SEC) approval of 401(k) Bitcoin investments could unlock $8.9 trillion in retirement capital, a potential unlocked capital figure cited in Tiger Research's analysis, while global harmonization of crypto regulations may reduce Bitcoin's volatility premium. Gold, meanwhile, benefits from its legal acceptance and lack of regulatory ambiguity.

Conclusion

Bitcoin's market competitiveness as a store of value is defined by its ability to outperform traditional assets in bull cycles while navigating volatility and regulatory risks. Its valuation is underpinned by macroeconomic tailwinds, institutional adoption, and on-chain scarcity metrics. Yet, gold's stability and safe-haven status ensure its relevance in diversified portfolios. For investors, the key lies in balancing Bitcoin's high-growth potential with gold's defensive characteristics-a duality that reflects the broader tension between innovation and tradition in modern finance.