Gold is a popular hedge against political and economic turmoil because it is a globally recognized store of value. It’s held by governments and even central banks all over the world, so investors feel safe parking their money in the precious metal when they see trouble on the horizon.
Bitcoin (BTC 1.95%) is a cryptocurrency that many investors also view as a store of value because of its fixed supply and decentralized structure. Some investors have even likened it to a digital version of gold, but that thesis crumbled in 2025 when it significantly underperformed the shiny yellow metal.
The first few months of 2026 have provided further evidence that one of these assets is a much better buy than the other in the face of geopolitical tensions, persistent inflation, and soaring government spending. Read on.
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Bitcoin might not be digital gold after all
Bitcoin is technically a scarce asset because of its capped supply of 21 million coins, and its decentralized nature makes investors feel secure because it can never be controlled by any person, company, or government. However, it doesn’t produce anything, so investors buy it purely in the hope that someone else will come along and pay a higher price in the future. This is known as the “greater fool theory.”
Nevertheless, it has worked out spectacularly well during the past 10 years, because Bitcoin has returned an eye-popping 16,900%, obliterating gold.
Bitcoin Price data by YCharts
However, when push came to shove last year, the trend reversed. The U.S. government ran a $1.8 trillion budget deficit in fiscal 2025 (ended Sept. 30), which sent the national debt soaring to a record high of more than $38.5 trillion. That led to fears of an inevitable increase in money supply, which, in theory, should have boosted the value of both Bitcoin and gold in dollar terms.
To make matters worse, the Trump administration imposed widespread tariffs on imported goods, which threatened to stoke inflation and slow the economy. This uncertainty should have been another tailwind for both assets, but while gold rocketed higher by 65%, Bitcoin ended 2025 with a 5% loss.
Gold Price in US Dollars data by YCharts
Investors have turned to gold yet again in 2026 in the face of extreme volatility in the stock market and oil prices, sparked by the ongoing war between the U.S. and Iran. The yellow metal is sitting on a year-to-date gain of 7%, while Bitcoin is nursing a 14% decline.
Simply put, when investors need a safe place to park their money in the face of rising uncertainty, they are making a very clear choice.
Today’s Change
(-1.95%) $-1510.51
Current Price
$76051.00
Key Data Points
Market Cap
$1.5T
Day’s Range
$75103.00 – $77630.00
52wk Range
$60255.56 – $126079.89
Volume
39B
Gold could surge even higher in 2026
The biggest driver of long-term upside for gold is the expanding supply of money. The U.S. was on the gold standard until 1971, meaning it couldn’t print additional paper currency unless it had an equivalent amount of physical metal to match. Predictably, abandoning that mechanism has led to a dramatic increase in money supply, and a staggering 90% decline in the purchasing power of the U.S. dollar. As a result, the value of gold has skyrocketed in dollar terms.
US M2 Money Supply data by YCharts
The U.S. government is on track for another trillion-dollar budget deficit in fiscal 2026, and billionaire hedge fund titans like Paul Tudor Jones and Ray Dalio believe this exorbitant spending will inevitably lead to a further increase in money supply. Tudor Jones has said that throughout history, civilizations have always tried to “inflate away” their debts by printing more money, which is likely why he has been adding to his position in the SPDR Gold Shares (GLD 1.07%) exchange-traded fund (ETF).
Moreover, the U.S. Federal Reserve has cut interest rates six times since September 2024, and it also paused its quantitative tightening program last year. As a result, the central bank is now increasing the size of its balance sheet by actively buying government-backed securities once again, which is pumping fresh money into the financial system.
The growing money supply combined with the increasingly tense geopolitical environment could drive gold prices even higher in the remainder of 2026, and potentially beyond. Unfortunately, based on recent history, Bitcoin simply doesn’t appear to be a good investment in the current environment.