Why Bitcoin Isn't Being Priced as Digital Gold: Bits + Bips

The intersection of cryptocurrency and global macroeconomics has never been more volatile—or more critical to understand. From the breakdown of legislative efforts in Washington to the New York Stock Exchange’s pivot toward 24/7 on-chain settlements, the landscape is shifting beneath investors' feet. Meanwhile, geopolitical maneuvers, such as the renewed interest in Greenland and aggressive tariff policies, are rewriting the rules of global trade and asset allocation.

In this edition of Bits + Bips, Coin Fund President Chris Perkins joins David Duong (Coinbase), Rahm Alawalia (Aluminina), and Austin Campbell to dissect the latest market signals. They explore why Bitcoin isn't currently behaving like digital gold, the implications of traditional finance co-opting blockchain technology, and the fragmented state of U.S. crypto regulation.

Key Takeaways

• Market Structure Deadlock: The coalition to pass a crypto market structure bill is fragile, with large banks and decentralized protocols at odds over stablecoin yields and regulatory oversight.
• Bitcoin vs. Gold Divergence: Despite geopolitical instability, Bitcoin has not tracked with gold’s recent rally, largely due to lingering market structure issues and unique dollar dynamics.
• Institutional takeover: The NYSE’s move to develop on-chain settlement for equities signals a massive validation of blockchain tech, but potentially at the cost of crypto-native firms losing the customer relationship.
• The "Realpolitik" Shift: Aggressive U.S. foreign policy moves, including tariffs and territorial interests, are pushing investors toward international equities and away from U.S. beta.

The Fragile Coalition Behind Market Structure

The legislative effort to establish a comprehensive market structure for digital assets in the United States has hit a significant snag. Recently, Coinbase publicly withdrew support for the draft bill, labeling it "unworkable." This move underscores the difficulty of uniting disparate groups—crypto natives, traditional banks, retailers, and regulators—under a single framework.

The core friction points revolve around stablecoin yield and the role of intermediaries. Traditional banks, particularly community banks represented by the ICBA, view stablecoins as a direct threat to their deposit base. However, the panel argues that this fear is misplaced.

"The share of deposits as a percentage of the system held by small banks was close to cut in half from 2009 to 2023. Stablecoins 100% had nothing to do with that... Just mathematically you can't square that."

Despite the logic that stablecoins are not the primary cause of community banking woes, the political reality remains: banks are positioning themselves against crypto to protect their turf. This "Empire Strikes Back" moment sees incumbents like Citadel and major banks influencing the legislative process to limit the flexibility of new crypto entrants.

The Consequences of Clarity

If a bill does pass, it will act as a significant filter for the industry. Under the current regime of "regulation by enforcement," many projects operate in a gray area. Legislative clarity would force a binary outcome: projects either comply or die. This is expected to wipe out a vast majority of tokens that lack utility or compliance structures, mirroring the dot-com bust where only the strongest tech companies survived.

Conversely, if legislation stalls, the U.S. risks ceding ground. However, the panel remains divided on the timeline. While some optimism exists for a Senate breakthrough, the prevailing sentiment is that political polarization makes near-term success unlikely.

Why Bitcoin Isn't Acting Like Digital Gold

One of the most perplexing trends in 2024 and heading into 2025 is the decoupling of Bitcoin from Gold. Historically touted as "digital gold," Bitcoin has failed to rally alongside the precious metal during recent geopolitical flare-ups. While gold prices surge due to global instability and central bank buying, Bitcoin has remained relatively range-bound.

Several factors contribute to this divergence:

• Dollar Dynamics: Typically, a weaker dollar boosts hard assets. However, idiosyncratic market structure events within crypto—specifically liquidity issues and the exit of market makers—have dampened Bitcoin's ability to capitalize on dollar weakness.
• Investor Behavior: The "digital gold" narrative has not convinced institutional allocators in the same way physical gold has. The selling pressure from late 2024 has alleviated, but the buying pressure required to match gold’s ascent hasn't materialized.
• Currency Debasement vs. Geopolitics: Bitcoin tends to react strongly to monetary debasement. However, current market movements are driven more by "Realpolitik"—territorial disputes and trade wars—where traditional sovereigns prefer physical reserves.

Wall Street Goes On-Chain

A watershed moment for the industry arrived with the news that the New York Stock Exchange (owned by ICE) is developing a platform for the trading and on-chain settlement of tokenized U.S. equities. This initiative aims to enable 24/7 trading and near-instant settlement, bridging the risk gap between continuous crypto markets and traditional banking hours.

While this is a validation of the thesis that "the future of finance is on-chain," it raises an existential question for crypto-native firms. For years, the crypto industry focused heavily on backend infrastructure and engineering, often neglecting the user experience.

"The tech is no longer the important part... If somebody is picking a blockchain to use for this stuff, they're going to pick on features, ease of use, and ability to implement effectively."

By failing to own the customer relationship, crypto natives may have paved the road for incumbents like BlackRock and ICE to drive the car. These traditional giants possess the regulatory moats, the capital, and the customer trust to implement blockchain technology at scale. The result may not be a decentralized revolution, but rather a modernized, 24/7 version of Wall Street running on distributed ledger technology.

The Opportunity for Disruption Remains

Despite the entry of giants, opportunities remain in underserved niches. The "internet capital markets" for small businesses and the creator economy are sectors that traditional finance ignores. Crypto entrepreneurs are urged to pivot from building better infrastructure for banks to solving specific financing problems for small businesses and creators who cannot access public capital markets.

Geopolitics and the Macro Rotation

The global stage is witnessing a return to "Realpolitik," characterized by the U.S. administration's aggressive pursuit of resources (such as the interest in Greenland) and the weaponization of tariffs. This shift is redefining alliances, with Europe and the U.S. increasingly at odds over trade and defense spending.

This geopolitical friction is influencing asset allocation. Investors are beginning to rotate out of U.S. high-beta stocks and into international equities. Emerging markets and European indices have begun to outperform the S&P 500, a trend driven by valuations and the perception of political risk within the U.S.

Simultaneously, the Federal Reserve faces a dilemma. Economic data suggests a "Goldilocks" scenario—low jobless claims and strong spending—yet the Fed is under pressure to cut rates. This inconsistency creates a dangerous setup: if the Fed cuts rates into a strong economy, it risks reigniting inflation. Conversely, holding rates high amidst a massive government debt burden could force a crisis. This uncertainty amplifies the argument for non-sovereign assets, even if the market hasn't fully priced that in yet.

Conclusion

The convergence of crypto and macro is no longer theoretical; it is operational. Whether it is the NYSE adopting blockchain settlement or geopolitical tensions driving commodity prices, the walls between these worlds have crumbled. For investors, the key lies in looking past the daily volatility to understand the structural shifts: the inevitable move toward 24/7 markets, the battle for regulatory clarity, and the enduring value of hard assets in a fracturing world.

Disclaimer: Nothing in this article constitutes investment advice. For more disclosures, visit unchainedcrypto.com/bipsandbits.