Bitcoin's Performance Compared to Gold: Analyzing Market Trends and Future Prospects
Bitcoin (BTC) has significantly underperformed gold (XAU) over the past year, experiencing a 13.25% decline while gold has surged nearly 100%. According to Cointelegraph, the question arises whether Bitcoin can match gold's impressive gains.
Bitcoin's supply is limited to 21 million coins, with approximately 1 million yet to be mined. Unlike gold miners, who can increase production when prices rise, Bitcoin miners cannot alter the number of coins issued by the network. The issuance of Bitcoin follows a predetermined schedule, gradually decreasing through halvings until reaching the hard cap of 21 million. Pierre Rochard, CEO of Bitcoin Bond Company, highlights that gold lacks a difficulty adjustment and halving, leading to increased investment in new mining projects as prices rise, which dilutes the above-ground gold supply.
Global gold production has seen a steady increase over the past 25 years, growing from around 2,300 tonnes in 1995 to over 3,500 tonnes by 2018, as reported by the World Gold Council. It reached a record high of 3,672 tonnes in 2025. By the end of 2025, 93% of all Bitcoin had been mined, with an annual inflation rate of approximately 0.81%. This rate is expected to decrease to 0.41% following the next Bitcoin halving in March 2028, according to Bitbo data.
As of January, Bitcoin's market value was only about 4.30% of gold's $41.69 trillion market cap. Despite this disparity, Bitcoin can still attract a marginal allocation from investors seeking hard-asset exposure for currency hedging, geopolitical risk, or long-term purchasing power protection. Jeff Walton, chief risk officer at Strive, a BTC treasury company, suggests that Bitcoin only requires a modest share of gold-style demand to rotate into BTC. Given Bitcoin's smaller market cap, even marginal demand can lead to significant percentage increases.
Theoretically, a 5% shift from gold into Bitcoin could result in over $2 trillion in inflows, potentially leading to a 116.25% increase in Bitcoin's market cap and a price target of approximately $192,000, based on current valuations. This scenario underscores the potential for Bitcoin to experience substantial growth if it captures even a small portion of the demand traditionally directed towards gold.
