Under the shadow of the US government shutdown, the three main reasons why gold outperformed Bitcoin
January 28 News, as the risk of a US government shutdown rapidly increases, the flow of safe-haven funds shows a clear divergence. Gold prices continue to strengthen, while Bitcoin, known as “digital gold,” performs sluggishly. Analysts point out that amid rising political uncertainty, gold has once again become the preferred asset, while Bitcoin faces multiple structural pressures.
Gabe Selby, Head of Research at CF Benchmarks, stated that concerns over the US federal government shutdown and fiscal outlook are exerting downward pressure on Bitcoin. He noted that while there are short-term positive factors for Bitcoin, these are more related to political developments rather than traditional monetary easing logic. The market initially expected fiat currency devaluation to drive Bitcoin higher, but in reality, its performance has lagged behind stocks and precious metals.
Data shows that the prediction platform Polymarket currently estimates a 77% chance of a US government shutdown. As Congress remains deadlocked over funding issues, safe-haven assets are reacting first. On Wednesday, gold prices broke through $5,280 per ounce, with an 85% increase over the past year; the S&P 500 index also hit new all-time highs. In contrast, Bitcoin has yet to regain the $90,000 mark, and the total market capitalization of the crypto market has shrunk by about $1 trillion from its October 2022 peak.
Analysts believe that Bitcoin’s underperformance compared to gold is mainly due to three reasons. First is technical risk. Ed Yardeni, President of Yardeni Research, pointed out that as a digital asset, Bitcoin may face security challenges from quantum computing in the future, whereas gold’s physical properties make it easier to understand and trust. David Duong also warned that some Bitcoin could be exposed to remote quantum attack risks under extreme circumstances.
Second is increasing competition. Mike McGlone believes that Bitcoin is not the only scarce asset, as the existence of numerous digital assets disperses investment focus, while gold’s competitors are relatively limited.
Finally, the logic of currency devaluation trading. Trump has repeatedly signaled that a weaker dollar is not ruled out, prompting funds to shift toward more traditional safe-haven assets. In this environment, gold, with its store of value and scarcity attributes, is more attractive in the short term than Bitcoin.
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