Gold and cryptocurrencies may often rise together, but the similarities end there, according to Michael Cuggino, president and portfolio manager at Permanent Portfolio Funds.
Speaking in a recent interview with CNBC, Cuggino said that despite earlier beliefs that Bitcoin could become a modern alternative to gold, the two assets behave very differently and react to distinct macroeconomic forces.
Cuggino explained that cryptocurrencies have evolved to mirror technology-sector dynamics rather than the behavior of traditional safe-haven assets. “At one point, I thought Bitcoin and other digital assets might replace gold,” he said. “But now we see that they respond more to liquidity cycles and speculative sentiment than to the same long-term macro drivers that move gold.”
According to him, Bitcoin’s relatively short trading history — roughly 15 years — shows a consistent correlation with tech indices such as the Nasdaq 100 (Triple Qs), particularly during periods of loose monetary policy. When central banks inject liquidity and interest rates fall, high-growth sectors and digital assets tend to rise together. Conversely, when financial conditions tighten, both usually experience sharp drawdowns.
Cuggino contrasted that pattern with gold’s enduring stability as a long-cycle hedge. The metal, he noted, tends to rally during times of economic stress, geopolitical risk, or monetary tightening that threatens real returns on traditional assets.
“Gold’s current strength isn’t speculative,” he explained. “It’s grounded in fundamentals — from central bank buying to expectations of lower real interest rates and continued geopolitical uncertainty. Those are the same forces that have driven its value for decades.”
Recent months have seen renewed interest in gold as investors brace for the possibility that the Federal Reserve could slow or even reverse its rate-hiking cycle. With inflation still sticky and growth cooling in several major economies, many market participants now anticipate a downward shift in policy, a backdrop that has historically favored gold.
While Bitcoin has at times been dubbed “digital gold,” Cuggino believes it hasn’t yet matured into that role. Instead, its behavior suggests it remains a risk asset, sensitive to liquidity and investor sentiment. “It’s too early to draw long-term comparisons,” he said. “Bitcoin has value as a new form of technology and digital store of value, but it doesn’t have the same history or macro logic that defines gold.”
Still, he acknowledged that both assets can coexist within modern portfolios — gold as a store of value during policy uncertainty and Bitcoin as an innovation-driven asset that may benefit from technology adoption and capital rotation into digital finance.
“The key for investors,” Cuggino concluded, “is recognizing that while gold and crypto can both rise, they’re rising for completely different reasons. Gold reflects fear and protection; Bitcoin reflects growth and speculation.”
