Financial market participants are processing a lot of uncertainty these days. Economic conditions, tariffs, geopolitics, the impact of AI, and many other factors have helped push worldwide uncertainty to an unprecedented level.

Investors are faced with challenges across asset classes, as this uncertainty bleeds across markets, including crypto. This environment has been impacting investment flows. Most notably, gold has risen to new all-time highs as investors seek the safe haven of hard assets. Bitcoin (BTC), however, has not been living up to its reputation as “digital gold.” Gold is currently trading near $4,800 per ounce while BTC is overover 40% off the all-time high it reached in October. In the last 12 months, gold is up 75%+ while BTC is down 22%. 

The performance of gold versus bitcoin has come up in several of my conversations with advisors this week. They want to know why bitcoin, which should benefit from the explosion of government debt burdens, currency debasement, and structural inflation, continues to significantly underperform gold. 

Bitcoin’s performance relative to gold is surprising, but not shocking. Why? Because this divergence reveals something important about where we are in crypto’s path to maturation. And it’s why we believe the current environment may be an ideal entry point for investors seeking broad exposure to this asset class.  

 

Flows over fundamentals

 

Here’s a principle I come back to often: short-term movements in commodity prices—including bitcoin—need to be analyzed by flows, not fundamentals. Fundamentals drive long-term value. Flows drive short-term prices. Confusing the two leads to frustration.

The debasement trade—a move away from fiat currencies and toward hard assets like gold, silver, and bitcoin—was contrarian a few years ago. Now it’s mainstream. But here’s what changed: the buyers executing this trade today are sovereign governments and central banks. China, India, Russia—they’re accumulating gold at an unprecedented pace. They see Trump’s tariff policies and dollar weaponization as sovereign risk. Gold is their hedge, just as it has been for centuries.

But their investment policies don't currently include bitcoin. However, in my opinion, that's the opportunity—not the problem. If most sovereigns already held bitcoin, the trade would be over. The whole point is that bitcoin is still non-consensus. Going from non-consensus to consensus among the world's largest capital allocators is the core of our emerging digital store of value investment thesis. It’s a view supported by a recent Deutsche Bank report that predicts bitcoin could be added to central bank reserves by 2030, alongside gold, as its volatility falls and its behavior resembles gold. But for now, bitcoin is a growth asset, not a hedge. 

The shift from growth asset to sovereign store of wealth won't happen in a quarter. It's generational. Gold has a five-thousand-year head start. That gap closes slowly—then all at once.

However, silver's role in the debasement trade may be a useful analogy for what may happen with bitcoin going forward. For years, silver frustrated investors who believed in the debasement thesis. As gold steadily climbed, silver stayed below its 2011 high of $50 for over a decade. Why? The same reason bitcoin is lagging now: central banks don't buy silver, so the sovereign accumulation driving gold's rally simply didn't flow into silver markets. It wasn't until gold's breakout became undeniable, and retail momentum traders rotated in, that silver finally caught the debasement bid, surging past $50 and eventually reaching all-time highs above $70. 

In the meantime, the largest base of bitcoin holders remains retail investors. And retail, in aggregate, behaves like momentum traders. They consistently rotate from assets with declining prices to assets with rising prices. The four-year cycle narrative, combined with precious metals rallying, likely triggered the rotation from crypto into metals. This is momentum behavior and explains the short-term divergence. But it doesn’t invalidate anything in our long-term thesis.

 

The long-term picture looks different

 

While headlines focus on price drawdowns, something else is happening in the background. Wealth managers continue building their long-term allocations. We see it in our daily conversations with advisors and in our ETF flows. We see it in the SEC’s 13-F filings, which show steady institutional accumulation. These buyers aren’t chasing momentum. They’re building positions for the next decade.

This is the pattern I’ve watched play out over eight years at Hashdex. Retail sentiment swings wildly with price. Institutional allocation grows steadily through cycles. Both can be true at the same time—and both are true right now.

 

The thesis remains intact

 

Most importantly, nothing has changed regarding bitcoin’s long-term investment case.

Bitcoin is a scarce digital asset with programmatically constrained supply. Demand has grown exponentially over fifteen years and, more recently, traditional financial institutions that previously dismissed this asset class—including Vanguard, Bank of America, Morgan Stanley, and UBS—are all opening up their platforms to bitcoin and crypto ETFs. 

The macro environment—fiscal deficits, currency instability, geopolitical fragmentation—remains favorable for non-sovereign stores of value. But bitcoin is still emerging and, along with the broader crypto ecosystem, has its own idiosyncratic obstacles. One of the biggest has been a lack of regulatory clarity, but a new regulatory framework may come in the not-too-distant future, as the US Congress moves forward with digital asset market structure legislation (CLARITY Act) which may be signed into law this year. 

Meanwhile, crypto is becoming the financial infrastructure for the 21st century. As we identified in our 2026 Crypto Investment Outlook, the incorporation of crypto into legacy financial infrastructure is already happening at scale, and it is poised to continue this year and beyond. Stablecoins and tokenization are proving to be crypto’s first “killer apps,” already moving trillions in value and set to grow exponentially with the regulatory clarity taking shape in the US. In other words, crypto`s integration into financial services is no longer just speculation. It’s happening in real time.

 

Our message to our clients

 

This month marks Hashdex’s eight-year anniversary. To the advisors and clients who’ve been with us through this journey, our recommendation hasn’t changed: Crypto presents an incredibly promising investment opportunity for long-term investors. As difficult as these markets have been, our conviction in the long-term growth of this asset class remains as strong as ever, and accessing this space via a single-digit allocation to a diverse set of crypto assets remains the ideal way to get exposure to this opportunity.

Over the long run, this type of discipline has beaten every short-term narrative. Every cycle brings calls that “this time is different,” but the reality is volatility is an important feature of this emerging asset class, not a bug, and should be treated as a tool for disciplined rebalancing— not a reason to abandon your strategy. The opportunity in crypto remains incredible, and time will continue to be the greatest hedge for investors with long-term horizons.  

 

— Samir Kerbage, Chief Investment Officer

 

 

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