Why Gold ETFs Outperform Bitcoin ETFs in 2025 Amid Geopolitical Uncertainty

In 2025, the global investment landscape has been reshaped by a seismic shift in asset preferences. As geopolitical tensions escalate and macroeconomic uncertainty looms, gold ETFs like SPDR Gold Shares (GLD) have outpaced Bitcoin ETFs such as iShares Bitcoin Trust (IBIT) in both returns and investor inflows. This divergence underscores a critical lesson for investors: in times of crisis, traditional safe-haven assets often outperform speculative digital alternatives.

The 2025 Performance Gap: Stability vs. Volatility

FactSet data reveals that GLD has delivered a year-to-date return of 24.4% in 2025, far outstripping IBIT's 14.5%. Despite Bitcoin's meteoric rise in previous years, its 2025 performance has lagged behind gold's resilience. This gap is not merely a function of market cycles but a reflection of shifting investor priorities. GLD has attracted $8.3 billion in net inflows year-to-date, while IBIT has drawn $14.9 billion. However, Bitcoin's lower returns and higher volatility—evidenced by a 1.2% gain over the past month versus GLD's 1.4% decline—highlight its precarious role in a risk-averse environment.

The volatility of Bitcoin ETFs becomes even more pronounced during geopolitical shocks. For instance, during the June 2025 Middle East escalation, gold surged to $3,500 per ounce, while Bitcoin initially dropped from $111,000 to $103,000 before recovering. This behavior aligns with historical patterns: gold acts as a stabilizer during crises, while Bitcoin's price swings mirror broader market sentiment.

Central Bank Demand: A Structural Tailwind for Gold

Gold's 2025 outperformance is underpinned by a structural shift in central bank behavior. Global central banks, particularly in emerging markets, have purchased over 900–1,000 metric tons of gold in 2025, diversifying away from U.S. dollar reserves. This trend, driven by de-dollarization and inflationary pressures, has increased gold's share in official reserves to nearly 20%, up from 15% in 2023.

The U.S., Germany, France, and Italy hold nearly half of the world's official gold reserves, but the momentum is now led by China and India. China's pilot program allowing insurance firms to allocate assets to gold and Japan's inclusion of gold ETFs in its NISA framework further cement gold's role as a strategic reserve asset. These developments create a durable floor for gold prices, even as Bitcoin's value remains susceptible to regulatory and macroeconomic headwinds.

Geopolitical Risk and the Safe-Haven Premium

Geopolitical volatility has amplified the appeal of gold as a hedge. Renewed tensions in the Middle East and the Russia-Ukraine conflict have triggered a “flight to safety” toward gold, with central banks and institutional investors prioritizing stability. J.P. Morgan Research forecasts gold prices to average $3,675 per ounce by year-end 2025 and approach $4,000 by mid-2026, driven by sustained demand.

In contrast, Bitcoin's response to geopolitical risks remains inconsistent. While cryptoassets historically gain 31.2% on average 50 days after a major geopolitical event, their short-term underperformance during acute crises—such as the June 2025 Middle East escalation—limits their effectiveness as a crisis hedge. This duality positions gold as a more reliable diversifier in portfolios exposed to global instability.

Strategic Asset Allocation: Gold's Edge in Uncertain Times

For investors navigating 2025's volatile markets, the strategic case for gold ETFs is compelling. Gold's low correlation with equities and its role as a hedge against currency devaluation make it a cornerstone of diversified portfolios. GLD's $101.9 billion in assets under management and 0.4% expense ratio offer liquidity and accessibility, while Bitcoin's 0.25% expense ratio in IBIT cannot offset its inherent volatility.

The APAC region, particularly China and India, has further strengthened gold's bull case. With gold ETF inflows reaching 310 tonnes year-to-date in 2025, investor demand for non-yielding, tangible assets has surged. Meanwhile, Bitcoin's appeal as a macro hedge is tempered by its sensitivity to U.S. Federal Reserve policy and regulatory scrutiny.

Investment Advice: Prioritizing Resilience

In 2025, investors should prioritize gold ETFs like GLD as a core component of their asset allocation. The interplay of central bank demand, geopolitical risks, and gold's safe-haven status creates a robust foundation for long-term gains. While Bitcoin ETFs may offer growth potential, their volatility and regulatory uncertainties make them less suitable for risk-averse portfolios.

For those seeking to balance growth and stability, a strategic allocation to gold ETFs—complemented by smaller, tactical positions in Bitcoin ETFs—could optimize risk-adjusted returns. As central banks continue to diversify reserves and geopolitical tensions persist, gold's role as a store of value will only grow in importance.

In conclusion, 2025 has reaffirmed gold's superiority as a crisis hedge. Investors who embrace this reality will be better positioned to navigate the uncertainties of an increasingly fragmented global economy.