Why Precious Metals Are Outperforming Bitcoin in a Post-Quantitative Tightening Era

In 2025, the global financial landscape has witnessed a striking divergence in the performance of traditional safe-haven assets and digital alternatives. Precious metals like gold and silver have surged to record highs, while Bitcoin has entered a bear market phase. This shift is deeply rooted in evolving monetary policy dynamics, particularly the conclusion of (QT) by central banks and the reemergence of inflation hedging as a dominant investor priority.

Monetary Policy Shifts and Liquidity Dynamics

The Federal Reserve's decision to end its QT program in late 2025 marked a pivotal turning point. By December 1, 2025, the Fed had officially concluded its balance sheet runoff, . , signaling a pivot toward accommodative monetary policy according to analysis. Unlike the abrupt QT1 phase of 2017-2019, which triggered repo market volatility, the Fed's approach in 2025 prioritized liquidity stability through (RMPs), ensuring ample bank reserves.

Meanwhile, other central banks have adopted divergent paths. The European Central Bank (ECB) accelerated its QT, , while the Bank of Japan (BoJ) initiated QT in 2024, albeit from an exceptionally high assets-to-GDP ratio of 115%. These coordinated balance sheet reductions reflect a global effort to mitigate risks from inflated asset prices and excessive liquidity, yet the Fed's policy reversal has created a unique environment favoring certain asset classes.

Safe-Haven Demand and Inflation Hedging

Gold's meteoric rise in 2025-surpassing $4,370 per ounce-underscores its enduring role as a hedge against macroeconomic uncertainty. Central banks, particularly in emerging markets, have driven this trend, with annual gold purchases exceeding 1,000 tonnes since 2022. Countries like China, Poland, and India have actively diversified their reserves away from the U.S. dollar, a strategy amplified by geopolitical tensions and concerns over currency devaluation. J.P. Morgan Research forecasts gold prices to average $3,675 per ounce in Q4 2025, with further gains expected in 2026 as these trends persist.

Silver, too, has benefited from this dynamic, . Its industrial demand and role as a smaller-scale inflation hedge have made it an attractive complement to gold in diversified portfolios according to market analysis. In contrast, highlights its vulnerability to volatility and its alignment with risk-on sentiment. While Bitcoin is often touted as a digital alternative to gold, its price movements in 2025 have mirrored broader equity market fluctuations, undermining its credibility as a stable safe-haven asset.

Central Bank Behavior and Structural Bull Cases

The structural bull case for gold is reinforced by its role as a counterbalance to the U.S. dollar's waning dominance. With U.S. national debt surpassing $37 trillion and the dollar's weakening status as a global reserve currency, central banks have increasingly turned to gold to safeguard against fiscal policy risks. This trend is supported by ETF inflows, which have reversed years of outflows and solidified gold's position as a cornerstone of institutional portfolios according to .

Bitcoin, however, faces existential challenges. threats and , coupled with regulatory uncertainty, have deterred institutional adoption. Major banks remain cautious about crypto exposure, and Bitcoin's liquidity issues-exacerbated by large drawdowns-further limit its appeal as a reliable store of value.

Conclusion: A New Paradigm for Safe-Haven Assets

The 2025 performance of precious metals versus Bitcoin reflects a broader realignment of investor priorities. As central banks navigate the post-QT era, gold's historical resilience, regulatory clarity, and role as a hedge against inflation and currency devaluation have cemented its dominance. Bitcoin, while still a speculative asset, has struggled to match the stability and trust associated with millennia-old commodities. For investors, this divergence underscores the importance of prioritizing assets with proven track records in times of macroeconomic and geopolitical uncertainty.