A timely analysis from CoinDesk argues that looking at performance relative to broad money supply (M2) changes how we judge hedges. Despite gold’s stellar 2025 rally, the metal hasn’t made a new high vs. M2 since 2011; bitcoin, by contrast, has set fresh highs vs. M2 each cycle, including in August–September 2025 when BTC also notched an absolute all-time high. The takeaway: both assets hedge different risks, but BTC has outpaced monetary expansion more consistently over its shorter life.
To anchor that concept, the U.S. M2 stock sat around $22.1 trillion in July 2025 (seasonally adjusted), up from earlier in the year, underscoring why “real” (money-supply-adjusted) returns matter when evaluating inflation hedges over long stretches.
2025 scorecard: price action and context
- Gold: The metal is having a banner year. World Gold Council data and market reporting show ~38–42% YTD gains into mid/late September, with spot prices around $3,700/oz—near record highs—as traders price in further Fed easing and steady official-sector demand.
- Bitcoin: BTC is up roughly ~23% YTD (through Sept. 19–21, 2025), a solid year but behind gold’s surge—an unusual reversal of the last few years’ pattern.
Those snapshots square with CoinDesk’s thesis: measured in dollars, gold is the near-term winner in 2025; measured against the growth of money, bitcoin continues to be the asset that reaches new highs versus M2 across cycles.
What’s driving the divergence?
1) Rates and real yields. Gold’s rally aligns with a turn in U.S. policy: the Fed’s September cut and expectations for more easing have supported precious metals. Headlines show spot gold probing new highs as markets price further cuts. Lower real yields typically ease the opportunity cost of holding non-yielding assets like gold.
2) Central-bank demand. Banks continue accumulating bullion, a multi-year theme cited by major sell-side houses as a pillar for higher targets (e.g., Deutsche Bank’s lifted forecast). This consistent bid provides ballast on dips.
3) Bitcoin’s structural flows. Since the advent of U.S. spot bitcoin ETFs in 2024, the flow picture matters as much as macro. September has featured notable net inflows into BTC ETFs (with brief outflow days around Fed events), helping support price even as crypto risk broadly wobbles.
4) Regional rotation and sentiment. Even with gold’s global strength, there are pockets of ebbing retail interest (e.g., recent softness in China’s gold ETFs and futures as equities rallied), a reminder that local flows can buck the global trend.
Why “BTC vs. M2” can look so different from “BTC vs. USD”
- Gold’s long baseline. Over half a century, gold has delivered strong nominal returns and diversification benefits, but relative to money supply, its highs are clustered around 1980 and 2011. In an era of frequent monetary expansion, that makes the hurdle for “real” new highs steeper.
- Bitcoin’s convexity. Each crypto cycle has seen new peaks against M2, suggesting that BTC’s adoption/halving dynamics and limited supply enable step-change gains that outstrip monetary growth—albeit with far higher volatility and deeper drawdowns along the way.
Portfolio use-cases: when gold, when bitcoin?
If you need ballast: Gold remains the classic defensive diversifier against policy error, geopolitical risk, and a sliding dollar. Its volatility is low relative to BTC and it has a long history of dampening portfolio drawdowns. (See WGC’s Goldhub for long-run stats on returns and volatility.)
If you seek upside to monetary expansion: Bitcoin’s track record vs. M2 implies a more convex hedge when liquidity expands. But that upside comes with acute volatility, headline sensitivity, and periodic 50–80% drawdowns—position sizing and time horizon are crucial.
Blended approach: Many allocators now combine a small BTC sleeve with a strategic gold core to capture gold’s stability and bitcoin’s upside optionality, rebalancing on big moves. The presence of spot BTC ETFs and widely held gold ETFs (e.g., GLD) has made implementation straightforward in brokerage accounts. Track ETF flows as a tell for near-term momentum.
Key risks to watch
- Policy surprises: Faster-than-expected disinflation or a hawkish turn can pressure both assets; gold is most sensitive to real yield spikes, while BTC responds rapidly to liquidity/ETF flow shifts. Short stints of outflows around Fed meetings have coincided with crypto risk-off.
- Macro growth scares: Severe growth shocks can cut both ways—gold may benefit from flight-to-quality, while BTC can trade like high beta risk before recovering with liquidity waves.
- Regulatory curveballs: ETF market plumbing, custody incidents, or new trading constraints can change flow dynamics quickly (mostly a BTC risk; gold’s structure is well-established).
How to act on the data (not advice)
- Decide the hedge you need.
- Concerned about policy easing and currency debasement? A BTC tilt may fit, given its pattern vs. M2.
- Seeking drawdown protection and low correlation to equities? Gold is still the go-to ballast, especially with central-bank demand underpinning dips.
- Use liquid wrappers and size sanely.
- GLD (for gold) and U.S. spot BTC ETFs offer simple access with daily liquidity; watch net flows to gauge near-term trend strength.
- Rebalance into strength.
- If BTC outruns gold (or vice versa), harvest gains and revert to target weights—this historically improves risk-adjusted returns for barbell hedges.
- Think in “money-adjusted” terms for long horizons.
- When M2 grows, nominal price highs can mislead. Use the M2 lens (as in the CoinDesk analysis) to keep your real hedge honest. Bookmark FRED’s M2 series to track the denominator.