The Value of Money Theory in Market Testing: Why Bitcoin Lags Gold Amid Uncertainty

Traditional money value theory teaches that in periods of high inflation and monetary uncertainty, value-storing assets must experience significant appreciation. But in 2025 to early 2026, this theory presents a paradox that confuses the global investment market. While gold has soared by more than 80%, bitcoin has actually experienced downward pressure of 15.97% in the past year (data as of January 29, 2026).

This drastic difference in performance has sparked a deep debate about whether bitcoin has truly failed as a digital store of value, or whether this market phenomenon reflects a more complex dynamic than just the failure of the “digital gold” narrative.

The Paradox of Value Protection in Practice

According to classical economic theory, protection against inflation should work simply: when the value of money declines, the limited number of hard assets will rise as compensation. Gold has proven this theory with its solid performance amid volatile geopolitics and interest rate uncertainty.

Bitcoin, which is marketed as “digital gold” with the same scarcity properties, is supposed to follow the same pattern. But the reality shows something different. The price of bitcoin is currently at the $85.16K level after declining since the beginning of the year, creating a performance gap that is hard to ignore.

The question arises: does this indicate the fundamental failure of bitcoin as a store of value, or are there other factors influencing market dynamics?

Digital vs Physical Money Value Theory: An Optimistic Perspective

Bitcoin proponents present an interesting argument to explain this phenomenon. According to Jessy Gilger of Gannett Wealth Advisors, the current gold surge is more a manifestation of investors’ “muscle memory”—the tendency of institutions to revert to assets they were familiar with in times of fear, rather than evidence of gold’s superiority in protecting the value of money over the long term.

“Although gold has a long legacy, bitcoin has shown technical stability at the protocol level for more than fifteen years,” he said. This argument suggests that the value of money theory is not just about short-term performance, but about the efficiency of the value store system in the long run—where digital scarcity may be superior to physical metals.

Redistribution Event, Not Request Failure

Mark Connors of Risk Dimensions offers a different perspective on the theory of the value of digital money. According to him, what is happening now is not a failure of demand for bitcoin, but a supply distribution event.

The inflow of institutional ETFs is indeed huge, but instead of pushing prices up, they simply absorb the supply from the previous decade sold by early adopters. “We are witnessing a transfer of ownership, not a failure of interest,” he explained.

This interpretation is important in understanding modern money value theory: not all price appreciation reflects an increase in fundamental value, sometimes simply indicating a change in the composition of asset owners.

Bitcoin Stuck In Tech Stock Correlation

Charlie Morris of ByteTree provided insight that bitcoin currently does not fail to protect the value of money inherently, but instead is interested in the dynamics of other digital assets—especially technology stocks. Over the past few years, bitcoin and internet stocks have shown a very close correlation.

“Gold is a store of value for the real world, while bitcoin is for the digital world. The current problem is in the real world,” he said. This perspective suggests that money value theory needs to consider the context of the ecosystem in which the asset operates.

Delayed Rotation: Waiting for the Next Momentum

Peter Lane, CEO of Jacobi Asset Management, acknowledged that the “digital gold” narrative has not been proven in current market conditions. Bitcoin does not behave like a true inflation hedge or safe haven during periods of geopolitical tension.

However, he maintained limited optimism: there is an already entrenched “comfort” in the mass market for precious metals that bitcoin has not yet managed to take. “I still believe eventually we will see a delayed rotation to BTC, but for now investors tend to choose what they know and trust,” he said. This view integrates an understanding of the theory of the value of money with the psychology of the investor’s market.

The Threat of Deflation and the Need for a New Narrative

ProCap Financial’s Anthony Pompliano provides a slightly different perspective on the current market dynamics. Bitcoin has indeed served as an inflation hedge for the past half-decade, but with the possibility of deflation on the horizon, bitcoin needs another demand narrative to continue to drive appreciation.

“I remain optimistic about bitcoin’s future prospects, but am aware that the macro environment and bitcoin market participants are evolving rapidly,” he said. These observations reflect a shift in the theory of the value of money—from a focus on inflation protection to a more holistic understanding of the function of assets in various economic scenarios.

Value of Money Theory: Permanent Solutions vs Temporary Protection

David Parkinson of the Bitcoin Lightning Network organization provides the most radical argument. According to him, the view that “digital gold has failed” is premature noise. Bitcoin’s continued limited supply and continued network growth continue to deliver tremendous returns against inflation—even compared to gold over a multi-year time frame.

“This is not just a ‘protection’ against inflation—it’s a permanent solution to it,” he claimed. This argument distinguishes between short-term protection (which gold now offers) and long-term structural solutions (which are believed to be bitcoin’s potential).

Relative Bitcoin Valuation: An Explosion Signal Awaits?

Bitwise’s Andre Dragosch adds an interesting technical perspective on bitcoin’s performance. Based on the Mayer multiple—a metric that compares bitcoin’s price relative to the long-term moving average—bitcoin is now at the same level as the FTX boom of 2022 relative to gold.

Furthermore, according to him, there is a huge under-pricing of bitcoin relative to the macro environment in 2026 and the level of global money supply that is likely to increase in the coming months. “I’m pretty sure that bitcoin will attract interest once traditional hard assets experience inflation to a very high level,” he said.

This analysis links the theory of the value of money with technical valuation metrics, suggesting that a delay in bitcoin’s performance might create a significant rebounding opportunity.

Conclusion: The Theory of the Value of Money in Transition

The debate between bitcoin proponents and empirical evidence of gold’s performance reflects a broader shift in how markets understand the theory of the value of money in the digital age. While gold continues to prove its status as a conventional store of value, bitcoin and other digital assets are still in the testing phase.

However, interpretations from various industry experts suggest that what is happening now may not be a bitcoin failure, but a consolidation stage before the next capital rotation. The question is no longer “can bitcoin be a store of value?” but “when will the market realize the superior efficiency of digital scarcity over physical metal heritage?”

The theory of the value of money, in this context, is undergoing a retest in an era where digital assets are beginning to become an integral part of global institutional portfolios.