Why Commodities Are Beating Crypto in the 'Trump Trade' Narrative

The 2024–2025 "Trump Trade" has reshaped global markets, with commodities outperforming cryptocurrencies despite the Federal Reserve's aggressive rate cuts and institutional adoption of digital assets. This divergence stems from macroeconomic positioning and risk sentiment shifts driven by Trump's protectionist policies, geopolitical tensions, and inflationary pressures. While crypto assets like Bitcoin and Ethereum surged on liquidity tailwinds, commodities-particularly gold and industrial metals-emerged as superior hedges against trade uncertainty and macroeconomic volatility.

Macroeconomic Factors: Tariffs, Inflation, and Fed Policy

The Trump administration's tariff-driven trade policies, including the April 2025 "Liberation Day" announcement, intensified global economic fragmentation and inflationary pressures. Core U.S. inflation rose to 3.1% in August 2025 as tariffs were passed on to consumers, eroding purchasing power and fueling demand for inflation-protected assets. Meanwhile, the Fed's rate cuts-initiated in late 2024-boosted risk-on sentiment, lifting crypto prices by 36% for Bitcoin and 23% for Ethereum. However, these cuts also weakened bonds and equities, pushing investors toward tangible assets like gold and industrial metals.

Industrial metals, such as copper, initially benefited from AI-driven electrification trends, rising 16.2% in H1 2025. Yet, Trump's proposed 50% tariff on imported copper triggered volatility, causing prices to decline in July 2025. Agricultural commodities faced mixed outcomes, with coffee prices surging due to supply constraints and tariffs, while others faltered amid weak global demand.

Risk Sentiment Shifts: Safe Havens and Geopolitical Uncertainty

Gold's dominance as a safe-haven asset underscores the role of risk sentiment in asset allocation. By 2025, gold prices reached $4,000/oz, driven by central bank demand (585 tonnes per quarter in 2026) and geopolitical tensions, including the Israel–Iran conflict. J.P. Morgan Global Research forecasts gold approaching $5,000/oz by 2026, citing its appeal as a hedge against trade wars and currency devaluation.

In contrast, crypto's performance remains tied to macroeconomic cycles and regulatory clarity. While Bitcoin ETF inflows pushed prices to record highs in early 2025, sharp retracements followed due to ETF outflows and regulatory uncertainties. This volatility highlights crypto's sensitivity to liquidity shifts and institutional capital rotations.

Investor Positioning: ETF Flows and Diversification Strategies

Investor positioning further explains commodities' edge. Gold ETFs and central bank purchases accounted for 27% annual gains in 2024 and 25.9% in H1 2025, reflecting a flight to safety amid trade policy uncertainty. Precious metals like platinum and palladium surged nearly 50% due to supply constraints and green technology demand, outperforming industrial and agricultural commodities.

Meanwhile, crypto's institutional adoption faces headwinds. Despite record ETF inflows, crypto's correlation with macroeconomic indicators (e.g., Fed policy, trade tensions) remains higher than gold's. For instance, the S&P 500 dropped over 12% in days following the April 2025 tariff announcement, illustrating equities' and commodities' vulnerability to policy shocks.

Conclusion: Commodities as Macro Hedges in a Trump-Driven World

The 2024–2025 "Trump Trade" has reinforced commodities' role as macroeconomic hedges. Gold's safe-haven status, industrial metals' ties to electrification, and agricultural commodities' exposure to supply shocks have made them more resilient to trade policy risks than crypto. While crypto benefits from liquidity and institutional adoption, its volatility and regulatory exposure limit its appeal in a high-uncertainty environment. For investors navigating Trump's protectionist agenda, commodities offer a more stable counterbalance to inflation, geopolitical tensions, and trade-driven market shocks.