Capital preservation strategies in an era of instability and change

With the advent of the digital age, gold's leadership has come under threat. A new contender has emerged on the scene — Bitcoin — claiming the title of the premier store of value. Despite its volatility and the controversies surrounding cryptocurrency, analysts increasingly point out that "digital gold" is beginning to replace the physical one in investment portfolios.

A new investment reality

According to recent insights from JPMorgan, investment flows are shifting from gold ETFs to cryptocurrency products. Between mid-February and mid-April 2025, gold prices rose as interest in Bitcoin declined, but over the following three weeks, the trend reversed: gold dropped by 8%, while Bitcoin gained 18%.

Experts describe this as a "zero-sum game" — when one asset rises, interest in the other tends to decrease. Furthermore, institutional support for cryptocurrencies, including backing from individual U.S. states, strengthens Bitcoin's position. Companies like Metaplanet and Strategy are actively increasing their crypto reserves, while states like Arizona and New Hampshire consider adding Bitcoin to official state reserves.

Gold as a capital preservation instrument

Advantages:

• Macroeconomic resilience: for centuries, gold has preserved purchasing power during inflation, recessions, and geopolitical shocks, serving as a stabilizing "anchor" for investors.
• Global recognition: gold is unique as a universal asset — part of central bank reserves, accepted worldwide, and independent of credit risk.
• Physical autonomy: the ability to store it in physical form (bullion, coins) allows investors to hold the asset outside digital or banking infrastructure, reducing operational risks.
• Relative price stability: low volatility makes gold preferred for conservative portfolios and long-term hedging strategies.

Disadvantages:

• Limited yield potential: gold's price depends on fundamental demand (jewelry, industrial, investment) and rarely shows exponential growth compared to derivative-based assets.
• Weak day-to-day liquidity: gold is rarely used in everyday transactions, limiting its utility outside investment contexts.
• Holding costs: storing gold involves logistics, insurance, and security expenses, especially for large volumes, which lowers net returns.
• No cash flow: gold doesn't generate interest or dividends; its value relies solely on market price dynamics.

Bitcoin as a store of value

Advantages:

• Asymmetric growth: Bitcoin has delivered unprecedented returns, outperforming most traditional assets. Its high sensitivity to liquidity and demand presents unique opportunities during bullish markets.
• Programmed scarcity: with issuance capped at 21 million coins, Bitcoin is a digital analog of a scarce resource, establishing a long-term deflationary model.
• Transnational liquidity: BTC trades 24/7 globally, with fast transaction execution and transparent tracking.
• Network neutrality: Bitcoin operates on a decentralized blockchain, free from centralized control, reducing political and issuance risks.
• Institutional recognition: since 2021, BTC has been integrated into strategic portfolios of public companies, hedge funds, and investment platforms, enhancing its legitimacy.

Disadvantages:

• Price volatility: daily fluctuations can reach double digits, making Bitcoin a high-risk asset and limiting its short-term store-of-value role.
• Regulatory uncertainty: crypto status varies across jurisdictions — from full legalization (El Salvador) to strict bans (China) — creating investor uncertainty.
• Technical vulnerabilities: loss of private keys, transaction errors, or exchange breaches can result in irretrievable capital losses.
• Environmental concerns: Bitcoin's Proof-of-Work mechanism is energy-intensive, drawing criticism from environmental groups and sparking debates over mining's future.

Why are investors changing courses?

The shift from gold to Bitcoin isn't just a temporary trend or speculative wave — it reflects a structural change in capital management strategies, driven by a transforming financial landscape.

Modern investors — especially institutions and tech-forward companies — increasingly see Bitcoin not as a risky experiment, but as a strategic component of a balanced portfolio. For instance, since 2020, MicroStrategy under Michael Saylor has systematically converted a substantial portion of its corporate treasury into Bitcoin, accumulating over 200,000 BTC. This has encouraged similar moves by other public companies, including Tesla, which acquired $1.5 billion BTC in 2021.

A generational shift also plays a key role. According to a 2023 Charles Schwab survey, Millennials and Gen Z favor cryptocurrencies over traditional assets in their retirement and brokerage portfolios. This preference stems from the pursuit of high returns and ideological leanings, particularly distrust of centralized financial institutions.

Meanwhile, Bitcoin's supporting infrastructure has significantly matured. The launch of spot Bitcoin ETF, approved by the SEC in early 2024, opened the door to investing in BTC through regulated, transparent instruments with capital protection.

Examples include the iShares Bitcoin Trust by BlackRock and the Fidelity Wise Origin Bitcoin Fund, which have attracted tens of billions of dollars. These products have made access easier for institutional investors and pension funds previously constrained by internal policies.

In the digital economy, flexibility, programmability, and global accessibility are key traits that make Bitcoin an increasingly appealing alternative to traditional stores of value.

Conclusion: Bitcoin or gold?

Choosing between Bitcoin and gold requires context — investment goals, time horizon, risk tolerance, and macroeconomic environment all matter.

Gold remains a global safe-haven asset with a track record of resilience during recessions, geopolitical crises, and inflation. For example, during the 2008 financial crisis, gold rose by over 30%, offsetting losses from other assets. Central banks like the People's Bank of China and the Reserve Bank of India continue to build gold reserves, underscoring their strategic importance in the global financial system.

On the other hand, Bitcoin introduces a new model of digital value — capped supply, open architecture, and issuer independence. Over the past decade, BTC has delivered an average annual return exceeding 100%, outperforming all traditional assets. In 2020–2021 alone, amid unprecedented monetary expansion, Bitcoin surged from around $7,000 to $64,000, acting as a hedge against fiat currency debasement.

From a portfolio management perspective, more analysts and asset managers now advocate hybrid strategies. For example, Bridgewater Associates' "Barbell Strategy" allocates a portion of assets to conservative holdings (gold) and the rest to high-yield, high-risk ones (Bitcoin), minimizing correlation and enhancing overall portfolio efficiency.

In conclusion, the most rational approach in today's macroeconomic environment is diversification between Bitcoin and gold.