In theory, bitcoin should thrive during times of uncertainty as it’s sound money that’s censorship-resistant. In practice, it’s becoming the first thing investors sell when push comes to shove.

As geopolitical tensions flared over the past week, following Trump’s threats of tariffs against NATO allies over Greenland and speculation of potential military action in the Arctic, markets pulled back, and volatility spiked.

Since Jan. 18, after Trump first threatened tariffs in his push for Greenland acquisition, bitcoin has lost 6.6% of its value, while gold has moved up 8.6% to new highs near $5,000.

The reason lies in how each asset fits into portfolios during times of stress. Bitcoin’s always-on trading, deep liquidity, and instant settlement make it an easy asset to offload when investors need to raise cash quickly.

Gold, despite being less accessible, tends to be held rather than sold. This makes bitcoin behave more like an “ATM” during periods of panic, undermining its reputation as digital gold, according to NYDIG’s Global Head of Research, Greg Cipolaro.

“Under periods of stress and uncertainty, liquidity preference dominates, and this dynamic hurts bitcoin far more than gold,” Cipolaro wrote.

“Despite being liquid for its size, bitcoin remains more volatile and reflexively sold as leverage is unwound. As a result, in risk-off environments, it is frequently used to raise cash, reduce VAR, and de-risk portfolios regardless of its long-term narrative, while gold continues to function as a true liquidity sink,” he added.

Large holders aren’t helping either.

Central banks have been buying gold at record levels, creating strong structural demand. Meanwhile, long-term bitcoin holders are selling according ot NYDIG’s report.

Onchain data shows that vintage coins are continuing to move toward exchanges, suggesting a steady stream of selling. This “seller overhang” dampens price support. “The opposite dynamic is playing out in gold. Large holders, particularly central banks, continue to accumulate the metal,” Cipolaro added.

Adding to the mismatch is how markets are pricing risk. The current turbulence is seen as episodic, driven by tariffs, policy threats, and short-term shocks. Gold has long served as a hedge for that kind of uncertainty.

Bitcoin, by contrast, is better suited to longer-term concerns, like fiat debasement or sovereign debt crises.

“Gold excels in moments of immediate confidence loss, war risk, and fiat debasement that does not involve a full system break,” Cipolaro added.

“Bitcoin, by contrast, is better suited to hedging long-run monetary and geopolitical disorder and slow-moving trust erosion that unfolds over years, not weeks. As long as markets believe the present risks are dangerous but not yet foundational, gold remains the preferred hedge.”

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