Bitcoin vs. Gold: Why Institutional Demand for Gold is Reshaping the BTC-Gold Ratio in 2025

The age-old rivalry between gold and Bitcoin has taken a decisive turn in 2025, as institutional demand for the yellow metal surges to record levels, reshaping the BTC-gold ratio and redefining the safe-haven asset landscape. With macroeconomic tailwinds favoring gold-ranging from a weakening U.S. dollar to geopolitical volatility-central banks and institutional investors are increasingly prioritizing gold over Bitcoin, despite the latter's growing institutional adoption. This shift underscores a critical divergence in how traditional and digital safe-haven assets are being positioned in portfolios amid a rapidly evolving macroeconomic environment.

Gold's Institutional Surge: A Macro-Driven Phenomenon

Global gold demand hit a historic 1,313 tonnes in Q3 2025, driven by a confluence of macroeconomic factors. Central banks alone purchased 220 tonnes in the quarter, a 28% increase from the previous period, as nations like China, India, and Russia continue to diversify their foreign exchange reserves away from the U.S. dollar. This trend is compounded by gold-backed ETF inflows of 222 tonnes and robust bar and coin purchases, reflecting a broad-based appetite for the metal.

The LBMA gold price averaged a record $3,456.54/oz in Q3 2025, a direct reflection of sustained investor confidence in gold as a hedge against inflation and currency devaluation. Geopolitical uncertainties, including ongoing conflicts in the Middle East and sanctions-driven fragmentation of global trade, have further amplified demand for gold as a store of value. According to the World Gold Council, this surge is not confined to any single region-North America, Europe, and Asia all contributed to the record-breaking figures.

Bitcoin's Institutional Demand: Outpaced by Gold's Resilience

While Bitcoin has seen its own institutional adoption milestones in 2025, including the launch of spot BTC ETFs in early 2024, its performance has lagged behind gold. Since the ETF debut, gold has risen 58% while Bitcoin has fallen 12%. This divergence is starkly evident in the BTC-gold ratio, which compressed by 50% between December 2024 and Q4 2025, falling from 40 to 20 ounces of gold per BTC.

Analysts attribute this underperformance to Bitcoin's perceived immaturity as an institutional asset. Mark Connors, a macro strategist, argues that Bitcoin remains "too young for institutional trust," with gold's established infrastructure and role in international trade settlements giving it a significant edge. For instance, gold is increasingly used in cross-border transactions by nations seeking to bypass Western-dominated financial systems, a use case Bitcoin has yet to replicate at scale.

Despite this, Bitcoin's institutional demand has outpaced new supply by over 6x in 2025, absorbing 690,000 BTC as of August 2025-far exceeding the 109,000 BTC mined during the same period. However, this demand has not translated into price parity with gold. The BTC-gold ratio now sits at its most oversold level since November 2022, with a 14-day RSI of 22.20, suggesting Bitcoin may be undervalued relative to gold.

Macroeconomic Positioning: Why Gold Dominates the Safe-Haven Narrative

The macroeconomic backdrop in 2025 has been a key driver of gold's dominance. A weakening U.S. dollar, fueled by divergent monetary policies and the Federal Reserve's cautious approach to rate cuts, has made gold more attractive as a hedge against fiat currency devaluation. Meanwhile, central banks' aggressive gold-buying spree-accounting for 220 tonnes in Q3 alone-has signaled a structural shift in how institutions view the metal.

Bitcoin, on the other hand, faces challenges in gaining similar institutional traction. While JPMorgan has projected that Bitcoin could rise to $165,000 on a volatility-adjusted basis relative to gold if the "debasement trade" continues, this scenario hinges on a sustained flight from fiat currencies. For now, however, gold's physical tangibility and centuries-old role as a safe-haven asset remain unmatched.

The Road Ahead: Rotation or Rebalance?

The BTC-gold ratio's current oversold condition, coupled with a Z-Score of -1.76, has sparked speculation about a potential rotation back into Bitcoin. Analyst Michaël Van De Poppe notes that the RSI for the BTC-gold pair has fallen below 30-a level historically associated with bear-market bottoms in 2015, 2018, and 2022-suggesting that gold may now be overvalued relative to Bitcoin.

However, gold's institutional demand shows no signs of slowing. With central banks projected to remain net buyers in 2026 and geopolitical tensions persisting, the yellow metal is likely to retain its edge as a macro-hedging tool. For Bitcoin, the path to institutional parity will depend on its ability to demonstrate resilience in a prolonged bear market and establish deeper integration into global financial infrastructure.

In the short term, the BTC-gold ratio appears poised for a test of historical support levels. If Bitcoin can break above its current 20-ounce-per-BTC threshold, it may signal a broader reallocation of safe-haven demand. But for now, gold's reign as the preeminent institutional safe-haven asset remains unchallenged.