Bitcoin Faces Dilemma: Understanding Strengths and Weaknesses Amid Gold Dominance

The question of Bitcoin’s strengths and weaknesses is now in the serious spotlight in the discussion of the digital asset market. While gold surged more than 80% amid global volatility, Bitcoin actually corrected 16.34% in the past year, creating a new narrative about the effectiveness of cryptocurrencies as a store of value. Nevertheless, Bitcoin proponents defend their argument by identifying the real root of the problem.

Bitcoin’s Downside: Failing to Execute the Digital Gold Narrative

Until now, Bitcoin has not proven itself as an effective inflation hedge or safe haven asset at a time of heightened global uncertainty. The divergence in performance between Bitcoin and gold creates an urgent question: why do investors still choose Bitcoin when precious metals and stocks provide more attractive returns?

In fact, Bitcoin is traded like a high-risk asset despite being designed as a store of value. The latest data shows the price of Bitcoin at $85.08K with an annual decline of 16.34%, while investor sentiment towards gold shows extreme optimism. Market observers note that sentiment indicators such as Bitcoin’s Fear & Greed Index remain stuck in the fear zone, in contrast to gold’s steadily rising conditions.

Bitcoin’s weakness is also reflected in the phenomenon of “investor muscle memory” — when uncertainty increases, institutional and retail investors tend to revert to familiar assets they’ve known for decades. Gold has a long track record as a store of value; Bitcoin is still considered a new and speculative asset despite having been around for 15+ years.

The Power of Bitcoin: Long-Term Perspectives and Different Narratives

However, Bitcoin advocates distinguish between short-term failures and long-term asset foundations. They identified three key forces that the market often overlooked:

First, massive institutional capital flows. The flow of Bitcoin institutional ETF funds is huge, but this phenomenon is not a failure of interest — but rather a period of ownership transfer. Large inflows only absorb the supply that the early adopters have held back for a decade. This is a redistribution of ownership, not evidence of a collapse in demand.

Second, Digital Scarcity vs. Physical Heritage. Bitcoin offers technical advantages that gold doesn’t have: a protocol that has proven stable for 15+ years, pure digital scarcity (21 million coins), and ever-increasing network efficiency. When the market realizes that digital scarcity is more efficient than physical legacy, capital will turn to Bitcoin.

Third, market rotation is delayed. Mayer’s analysis of Bitcoin multiples shows that Bitcoin’s valuation is already at the level last seen in 2022 — relatively underpriced considering the 2026 macro environment. When traditional hard assets experience overinflation, capital will start looking for more attractive valuation alternatives like Bitcoin.

Technical and Psychological Aspects: Ecosystem Differences

An in-depth perspective reveals that Bitcoin and gold actually serve different functions in the digital age. Gold is a reserve asset for the real world, whereas Bitcoin is an asset for the Internet’s digital ecosystem. The close correlation between Bitcoin and tech stocks explains why Bitcoin is retreating along with high-beta technology — not because the asset is failing, but rather because market pressures are currently in the real world (geopolitics, inflation, interest rate uncertainty).

In addition, there are fundamental differences in market perception: gold enjoys an “embedded trust” inherited from hundreds of years, while Bitcoin is still perceived as a risky asset despite having superior store-of-value characteristics. As uncertainty eases and the market looks for yields, a rotation of capital to Bitcoin could potentially occur.

Searching for a New Catalyst: From Inflation Hedges to Digital Monetary Standards

An important development is the evolution of Bitcoin’s narrative from a mere “inflation hedge” to a permanent solution to inflation — even more so, as the Internet’s native monetary standard. The growth of the Bitcoin network and its fixed supply continues to provide tremendous returns in the long run compared to inflation and even gold.

Nevertheless, with the possibility of deflation on the horizon, Bitcoin needs an alternative demand catalyst. The expansion of use cases—from store of value to infrastructure monetary assets—is a crucial factor to drive further adoption. Many analysts remain optimistic that this transition period is temporary, and once macro uncertainty subsides, Bitcoin will begin a strong chase phase against gold.

Conclusion: Strengths and Weaknesses as a Reflection of the Transition Phase

The question of Bitcoin’s strengths and weaknesses does not have a simple answer. Bitcoin’s downsides lie in the perception of the market that still sees it as a risk asset, the lack of institutional “memory investing” as in gold, and the correlation with tech stocks. While Bitcoin’s strength lies in its solid technical foundation, digitally limited supply, and the potential for delayed but significant capital rotation.

In the context of a rapidly evolving market, Bitcoin remains an asset that will take time to prove its superiority, but for long-term investors, these fundamental forces suggest that Bitcoin has not yet failed — just waiting for the momentum of the next phase.