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Gold’s reign as the dominant hard asset of 2025 could be nearing its end.
The precious metal is having its best year in five decades with a roughly 54 percent return. In breaking record after record, gold has easily outpaced its digital counterpart in bitcoin, which has gained “just” 22 percent over the same period.
But as investor Anthony Pompliano pointed out in a note earlier this week, a “great rotation” from gold to bitcoin could be upon us. He highlighted that, historically, bitcoin’s trajectory trails gold by about 100 days.
That was a prescient call, according to the latest price action.
Gold has marched higher over the last three months while bitcoin has fallen as much as 10 percent.
But that reversed on Tuesday, with the returns of both assets suddenly converging toward one another as if traders suddenly repriced their hedges.
“We may be on the doorsteps of the great rotation from gold to bitcoin,” Pompliano said on Monday. “If that theory comes true, bitcoin will likely have a fireworks ending to the year.”
The move becomes more clear when you zoom in on the chart.
In the context of previous bitcoin bull markets, this pattern makes sense.
As much as gold has surprised global investors with its strength, bitcoin has surprised with its relative weakness compared to its own track record.
Since 2015, bitcoin has averaged:
- 20 percent gain in October
- 59 percent gain in Q4
- 82 percent compounded annualized growth rate
Meanwhile, gold has averaged an 11.6 percent annual gain over the last decade — a figure that makes its recent outperformance even more of an anomaly.
In any case, there are structural reasons both assets will continue to appreciate for years to come.
- Governments will continue to debase their currencies
- Central banks will continue accumulating gold (and eventually bitcoin, as Deutsche Bank predicts)
- Investors will increasingly seek to protect purchasing power
- Rising geopolitical uncertainty will accelerate the flight to hard assets
The “great rotation” is as much a battle between gold and bitcoin as it is a fight to preserve purchasing power.
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Phil Rosen
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