Bitcoin fell as the Federal Reserve pulled back its balance sheet through 2025, while gold rallied on geopolitical tensions, exposing the different forces driving two assets often grouped together as stores of value.
The divergence shows bitcoin tracks the availability of credit in the financial system rather than serving as a simple “digital gold” replacement, according to recent research from CoinShares. The cryptocurrency fell as the Fed reduced its balance sheet while gold responded to sovereign demand and global tensions. The setup for 2026 looks different, with political pressure to expand credit potentially reversing the dynamic that favored gold over the cryptocurrency throughout 2025.
Bitcoin tracks the Fed’s balance sheet, falling when the Fed pulls back and rising when it expands, according to the CoinShares research. In 2025, the Fed reduced its balance sheet and the cryptocurrency responded exactly as that framework predicted.
Gold outperformed bitcoin throughout the year, according to the research. This created confusion for investors who internalized the “digital gold” narrative without understanding the mechanics underneath. Gold rallied on geopolitical tension and sovereign demand regardless of what was happening with credit markets, while bitcoin rallied on monetary expansion.
Alternative cryptocurrencies got hit harder than bitcoin as money tightened during 2025, according to CoinShares. Bitcoin reclaimed its dominant position, and most altcoin projects saw outflows as fast money rotated to artificial intelligence stocks, bitcoin, and gold.
The setup for 2026 looks different, according to the research. Political pressure to lower rates, expand the balance sheet, and support economic growth points toward a reversal of what happened in 2025. Bitcoin becomes more attractive when the Fed increases credit availability, not because of narrative or adoption metrics, but because the main driver shifts direction.
The CoinShares Bitcoin and Ether ETF (BTF) offers exposure to the two primary crypto assets through futures contracts, according to ETF Database data. The fund holds $18.6 million in assets and carries a 1.27% expense ratio.
For exposure beyond those two assets, CoinShares also offers the CoinShares Altcoins ETF (DIME), which uses an actively managed approach to select Layer 1 alternatives like Solana and Avalanche rather than tracking a broad basket, carrying a 0.00% expense ratio.
Bitcoin’s potential reversal could align with historical patterns, according to the research. Since 2018, the Bitcoin-to-silver ratio has bottomed out every 14 months before reversing, and the current cycle is approaching that timing. Regulatory clarity and a new Fed chair are also on the horizon, though uncertainty remains about whether these developments are already priced into current valuations.
