Although supporters of Bitcoin have long touted the potential of cryptocurrency as "digital gold" and a safe haven, this asset is rarely traded with this logic.

$Bitcoin (BTC.CC)$ The recent price differentiation of gold is particularly evident. The price of gold has continued to hit new highs, while bitcoin has been range-bound for the past few months after reaching a historic high in March.

According to Dow Jones Market Data, the settlement price of gold futures delivered by the Comex exchange in December reached a record high of $2,550.60 per ounce on Tuesday. This marks the 30th highest settlement price for the most active futures contract so far this year, followed by a slight pullback.

Joseph Cavatoni, Senior Market Strategist at the World Gold Council, stated that the recent strength in gold is primarily supported by central bank purchases. Market volatility earlier this month and geopolitical tensions have also prompted investors to seek gold as a potential safe haven.

Meanwhile, since April, the trading price of Bitcoin has mostly been between $50,000 and $72,000. As the November US presidential election approaches, cryptocurrency investors are concerned about central banks potentially selling seized Bitcoin and the uncertainty surrounding cryptocurrency regulation, leading to hesitation in making directional bets.

The recent divergence in performance between Bitcoin and gold once again confirms that, although many Bitcoin bulls hope that cryptocurrency can serve as a store of value, it is primarily traded as a risk asset in most cases.

Cavatoni points out that Bitcoin and gold are fundamentally different assets, with the latter being much less volatile. Over a five-year period from December 31, 2018 to December 31, 2023, the average daily volatility of Bitcoin is about 60%, compared to about 15% for gold.

Cavatoni pointed out that an analysis by the World Gold Council shows that by including gold in the investment portfolio, regardless of the allocation level, it can provide a higher risk-adjusted return for the portfolio. Holding gold over the past decade increases the risk-adjusted return and reduces the volatility of the investment portfolio.

In contrast, adding bitcoin to the investment portfolio and holding it over the past decade only increases the risk-adjusted return when the allocation limit reaches a certain level (in this case, 2.5%). However, exceeding this allocation level will increase the volatility of the investment portfolio and decrease the risk-adjusted return.

Aurelie Barthere, Chief Research Analyst at Nansen, a cryptocurrency analytics company, said that for bitcoin to become a potential safe haven, it needs wider adoption by institutions and a significant reduction in volatility.

Barthere said, "Bitcoin sometimes experiences an 80% drop within a year, so it is difficult to consider it as a safe haven."

Cavatoni said that the use cases of bitcoin still need to be clearly defined. "This is where it differs from gold, as you can also consider it from the perspective of central banks using it as a reserve asset."

This is the direction that many bitcoin enthusiasts have been advocating, especially since Republican presidential nominee Donald Trump pledged to establish a bitcoin reserve in the United States. Republican Senator Cynthia Lummis from Wyoming has proposed a bill that outlines the plan to establish such a reserve.