Expert Economist Shares the Real Reason Bitcoin Lags Behind Gold

Dr. Bob Murphy, a senior fellow at the Mises Institute and an economist, assessed the key reasons behind gold’s recent dominance over Bitcoin (BTC) and the changes in the global economy.

According to Murphy, “uncertainty” and “geopolitical risks” in the market are driving investors towards gold, a millennia-old safe haven asset, rather than digital assets.

Murphy attributed gold’s strong rise over the past 12 months to investors’ anxiety about “real crisis” scenarios.

Murphy stated that Bitcoin and gold normally behave similarly under the principles of “sound money,” but they diverge during times of crisis. According to Murphy:

• Both assets rise only when an increase in liquidity (money printing) is expected in the economy. However, when real uncertainty arises, such as “what will happen next month is unknown,” or a “Mad Max” type of chaos scenario emerges, investors turn to physical gold instead of blockchain tokens.
• While acknowledging that Bitcoin holds great promise and offers ease of use, Murphy stated that gold has retained its status as a tested and reliable safe haven for thousands of years.

Murphy stated that another critical factor in the rise of gold is the strategies of central banks, noting that China and Russia, in particular, have increased their gold reserves enormously. He added that the US’s status as a global superpower is being shaken and the world is evolving towards a multipolar structure. This situation is driving central banks towards non-dollar assets and physical gold.