Why is Bitcoin not suitable as a quick refuge during times of market stress

In the first week of January, geopolitical tensions triggered the expected market reaction. But the results revealed an important truth about which asset is truly suitable for different types of commitments: Bitcoin lost 6.6%, while gold rose by 8.6% and approached $5,000 per ounce. Currently, BTC continues to battle headwinds, pointing to a deeper mechanism explaining why digital assets are not suitable as short-term hedges compared to traditional precious metals.

Bitcoin as an “ATM” - why it’s unmatched during times of fear

Many believe that Bitcoin, as “digital gold,” should reach a price level when global uncertainty increases. Theoretically, this is correct — it is censorship-resistant and not subject to inflation like fiat. But in practical markets, cryptocurrency behaves more like an automated teller machine than a long-term store of value.

The reason lies in the fundamental characteristics of the two assets. Bitcoin, due to continuous 24/7 trading, deep liquidity, and instant settlement, becomes the perfect liquidation vehicle when investors need cash quickly. Greg Cipolaro, Global Head of Research at NYDIG, explained that “under stress and uncertainty, liquidity demand increases, and this dynamic hits Bitcoin harder than gold.”

Gold, on the other hand, is harder to sell quickly due to its physical nature and fewer trading venues outside regular hours. As a result, large stakeholders tend to hold onto their gold positions even under stress, while Bitcoin is rapidly sold to obtain immediate liquidity.

Leverage dynamics - why long-term holders exit

Another critical mechanism is the role of leverage. Under normal market conditions, margin trading helps the Bitcoin ecosystem grow. But when fear and uncertainty rise, traders immediately de-leverage, triggering a cascade of forced selling.

On-chain data shows a clear pattern: vintage Bitcoin coins, held by long-term hodlers, continue to move toward exchanges. This is not just profit-taking — it’s strategic deleveraging and liquidity-seeking behavior.

Meanwhile, central banks worldwide continue to buy gold at record levels, creating a structural demand floor for the yellow metal. “The opposite dynamics are happening with gold. Major holders, especially central banks, are continuously accumulating the metal,” Cipolaro’s analysis states.

Where each asset truly fits - the time horizon is key

The fundamental misunderstanding about Bitcoin as a safe haven revolves around a simple but critical factor: the time frame. Bitcoin and gold are suitable for different types of performance in times of uncertainty.

Gold is ideal for short-term geopolitical shocks, trade wars, and moments of sudden loss of confidence. “Gold performs very well during immediate confidence crises, war risks, and fiat devaluation that do not require a complete systemic breakdown,” Cipolaro says. It is the immediate-relief asset that portfolio managers will turn to instantly when faced with sudden threats.

Bitcoin, on the other hand, is more appropriate as a hedge against long-term structural concerns — such as gradual fiat currency debasement or sovereign debt crises that unfold over years. “Bitcoin is more suitable as a hedge against long-term financial and geopolitical turbulence and the slow erosion of confidence over a long period, not weeks,” he adds.

Market sentiment and the disconnect with the narrative

The current environment shows a disconnect between the theoretical narrative of Bitcoin as a “hard asset” and actual market behavior. JM Bullion’s Fear & Greed Index for precious metals indicates extreme bullish sentiment, while its cryptocurrency counterpart remains clouded by fear.

Last week, as gold approached historical levels near $5,000, BTC declined due to risk-off sentiment. The real-world lesson is clear: during sudden market stress, investors seeking a “store of value” prefer physical gold and silver over digital tokens, regardless of the long-term narrative.

The current landscape - BTC at $87.99K and implications

As we look ahead, Bitcoin is trading at $87.99K with a 24-hour pullback of -2.40%. This price is higher than earlier in the month, but the underlying dynamics remain: the asset is more suited for long-term theses such as monetary debasement and systemic geopolitical risk, not for short-term portfolio defense.

Investors seeking immediate protection against current trade tensions and tariff threats will find quicker relief in traditional safe havens. Bitcoin is better used as a satellite allocation that supports long-term macro theses, not as the primary hedge during episodic market disruptions.

Central banks have compounded these dynamics by continuing to accumulate gold, while sophisticated Bitcoin holders strategically reduce exposure during stress periods. Until the fundamental market structure shifts, gold will remain the more suitable tool for short-term geopolitical hedging, while Bitcoin stays aligned with long-term systemic uncertainties.