he popular belief that Bitcoin (BTC) functions as “digital gold” and serves as a reliable store of value has proven to be more myth than reality. Over the past 12 months, gold surged approximately 70% to over $5,100 per ounce, while BTC fell more than 30% from a high of $126,000, dipping below $60,000 in early February.
Bitcoin's Digital Gold Narrative Has Failed
Aleisha Lee • February 24, 2026
Aleisha Lee, CPA, Licensed Real Estate Agent (Queensland)
24 February 2026 < 4 minutes read
Although BTC shares certain characteristics with gold —
scarcity, high mining costs, and difficult to replicate, recent price action and its strong correlation to tech equities (0.8 to the Nasdaq and 0.73 to the iShares Expanded Tech Software ETF, IGV) show that BTC behaves like a high-risk tech stock rather than a “flight to safety". Macro factors that drive gold’s performance do not influence BTC, which explain why gold reached all-time highs while BTC didn’t.
Source: The Bitcoin Magazine
BTC Fails the Institutional Monetary Function
BTC is not recognised by major central banks as a reserve or collateral asset in the same way as gold or sovereign bonds. Central banks hold gold as part of foreign exchange reserves because it is highly liquid, globally recognised, and free from counterparty risk, making it a dependable store of value during crises.
In periods of stress, foreign central banks can access $USD liquidity through swap line agreements with the Federal Reserve, with both parties agreeing to reverse the transaction at predetermined exchange rates, minimising credit and exchange rate risk.
Gold can also be
mobilised, sold, or
used as collateral, functioning as monetary insurance that preserves liquidity and confidence during extreme economic or geopolitical events.
Bitcoin, by contrast, is
not recognised as a reserve asset, is excluded from central bank liquidity facilities, and does not serve as collateral in sovereign funding markets, offering no equivalent institutional utility.
BTC Fails the Sovereign Reserve Function
Non-OECD central banks—including China, India, Turkey, and Poland—have increased
gold
purchases to
diversify away from $USD, hedge against inflation, and protect against geopolitical risks, particularly following the freezing of Russian assets by Western powers in 2022. These same institutions are not adding BTCs to their primary reserves. This demonstrates that BTC fails the sovereign reserve function:
it cannot provide crisis liquidity, act as collateral in monetary operations, or serve as a trusted hedge against geopolitical and financial instability.
European and other central banks have formally rejected BTC as a reserve asset. The European Central Bank, National Bank of Poland, Swiss National Bank, and Hungarian Central Bank have all rejected BTC in their official reserves. Meanwhile, China, pursuing “gold supremacy” to build a U.S. dollar alternative, has added over 1,080 tons of gold since mid-2022—potentially lifting its reserves to an estimated 5,500 tons, second only to the U.S, while its 194,000 BTC holdings are largely historical seizure assets.
Recently, China has banned cryptocurrency trading for its 1.4 billion population to maintain financial control and preserve ‘common prosperity’ under the Communist regime. The position adopted by central banks globally
reinforces the view that BTC cannot be relied upon to maintain sovereign monetary stability, provide crisis liquidity, or function as a dependable strategic reserve asset.
Source: BTC.Inc
BTC's Concentrated Ownership Has Failed the Global Neutrality Test
BTC’s ownership is heavily concentrated in the United States rather than being globally distributed. Of the top 20 holders, 18 are U.S.-based entities, and Michael Saylor’s Strategy (NASDAQ:MSTR) alone controls roughly 717,131 BTC, or 3.4% of the total supply.
U.S. spot ETFs and institutional investors hold an additional 12% of circulating BTCs. This concentration exposes BTC’s price and stability to U.S. domestic conditions, policies, and market sentiment, making it extremely vulnerable to geopolitical or financial shocks. In contrast, gold’s distributed global ownership allows it to act as a neutral and reliable crisis hedge.
BTC Fails the Permanence and Security Test
BTC’s security and scarcity are increasingly threatened by long-term risks such as quantum computing. Dormant BTCs, which estimated at over 4 million coins, could potentially be accessed by future quantum attacks, creating the risk of sudden supply shocks that undermine the coin’s fixed-supply narrative. Gold, in contrast, benefits from a 6,000-year trust premium, while BTC’s 17-year history leaves institutional investors questioning its reliability as a permanent, risk-free store of value. These vulnerabilities erode BTC’s claim to function as a stable, long-term hedge or digital equivalent of gold.
Key Takeaways
Recent price movements clearly illustrate gold’s resilience and BTC’s failure as a hedge. While gold has rallied through macroeconomic and geopolitical headwinds — tariffs, the Iran conflict, government shutdowns, and currency crises, Bitcoin has largely moved in tandem with risk assets, failing to protect investors during turmoil.
For BTC to reclaim the digital gold status, it must begin to behave like a true hedge in times of stress. Until then, gold remains the enduring safe-haven, while BTC’s “digital gold” narrative remains a fairytale for investors.
Disclaimer
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