Bitcoin Mania. Gold Fever. A Reality Check for Investors
There’s a lady who’s sure all that glitters is gold, And she’s buying a stairway to Heaven- Led Zeppelin
There’s an old saying: all that glitters isn’t gold, a reminder that appearances can be deceptive. Yet in Stairway to Heaven, Led Zeppelin sang about a lady who’s sure all that glitters is gold—and she’s trying to buy her way to paradise.
The same flawed thinking often shows up in investing. You can’t shortcut your way to financial freedom or solve your entire retirement goal by chasing the latest shiny trend, whether it’s Bitcoin, gold, or whatever is lighting up CNBC this week. By example, Bitcoin mania is smashing new all-time highs. Gold is glittering again as investors fret over inflation and global turmoil. Silver is quietly rallying in the background.
For investors, this creates a familiar tug-of-war: the urge to chase the hottest trends and make big bets versus the discipline of sticking to a diversified, and admittedly boring, portfolio strategy. Should you jump on the crypto and gold bandwagons in full, dabble lightly, or avoid them altogether? The short answer is this: utilize these sectors sparingly and focus on balance, not bets.
Jon here. Not necessarily a tulip craze, but we have seen this movie before. From the late 90s tech stocks, to the 2010 gold mania, the 2020 meme stock frenzy (GameStop), the 2021 NFT explosion (think Bored Ape Yacht Club), and crypto’s wild ride over the past decade, one thing remains true: wealth is not built by chasing headlines. It is built by crafting a diversified, disciplined portfolio that works through booms and busts alike.
Bitcoin Mania: Digital Gold or Fool’s Gold?
The “digital gold” nickname came from Bitcoin’s very design. Like gold, Bitcoin has a finite supply, capped at 21 million coins. Its mining process, solving complex algorithms, was intentionally built to mimic the effort and scarcity of pulling gold out of the ground. Proponents argued it could act as a modern store of value, immune from inflation and central bank meddling. By 2013, early crypto advocates were calling it “digital gold” to appeal to traditional gold bugs and win over skeptical investors.
Bitcoin’s meteoric rise since 2009 is no longer just about speculation. In 2024, the SEC approved eleven spot Bitcoin ETFs, marking a historic shift in regulatory stance. After a decade of resistance, these approvals gave crypto exposure a layer of legitimacy that even cautious investors could not ignore.
For purists, cryptocurrencies still promise a fully decentralized financial system, free from the grip of governments and central banks. For others, blockchain technology offers frictionless global value exchange. Whether these grand ambitions ever materialize is still up for debate.
In the meantime, Bitcoin acts more like a speculative asset than a true currency. Even with ETFs and institutional adoption, you still cannot walk into Whole Foods and buy your groceries with Bitcoin. It is not backed by any government, it is not widely accepted for everyday transactions, and it remains wildly volatile.
During the 2022 bear market, Bitcoin cratered more than 75% while the S&P 500 fell roughly 25%. (see chart) Sure, Bitcoin eventually rebounded, but the ride was far more stomach-churning for crypto investors. Recently, Bitcoin surged to new highs (see chart) as Congress debated several cryptocurrency regulations during what has been dubbed “Crypto Week.”
Do the three new bills legitimize Bitcoin? Not directly. These laws are aimed at regulating stablecoins, clarifying how crypto assets are defined, and blocking the Fed from launching a digital dollar. Still, they represent a meaningful policy shift toward building out crypto infrastructure.
The GENIUS Act, in particular, is the first-ever federal crypto law, giving stablecoins a layer of oversight and legitimacy. The CLARITY Act might help Bitcoin indirectly by reducing regulatory gray areas, but none of these measures turn Bitcoin into legal tender or make it widely spendable.
There are deeper concerns too:
🐋 A handful of “whales” control much of the market. About 2% of Bitcoin wallets hold 95% of all coins (Flipside Crypto, 2020). Caveat: this refers to wallet addresses, not individual owners.
Many large addresses belong to exchanges pooling user assets, which can give a misleading picture of ownership concentration. It may take just a significant cyber/bitcoin typed crime to deflate the value of Bitcoin.
📊 A staggering share of Bitcoin trading volume is fake or manipulated. A 2019 Bitwise report estimated that 95% of reported spot Bitcoin volume was artificial, driven by wash trading on unregulated exchanges. Supporting research from an August 2022 Forbes analysis confirmed over 50% of Bitcoin trades were fake, and academic studies from 2021 to 2024 document 70–90% wash trading on smaller platforms.
Even Wall Street’s biggest names like JPMorgan CEO Jamie Dimon remain skeptical on bitcoin while at the same time enabling his clients to buy Bitcoin through third-party platforms, though the bank itself will not custody it.
The takeaway? Bitcoin ETFs offer easier access and regulatory oversight, but the asset itself remains speculative.
Gold: Glitter, Guard, and Bust Cycles
Gold has long been marketed as a hedge against inflation, currency devaluation, and geopolitical turmoil. But right now, it is doing more than glittering.
It has been nearly three months since gold climbed past $3,500 an ounce to its highest price on record. Key forces emerging since the start of Trump’s second term may continue to support prices in the months ahead. Chief among them: his threatened and imposed tariffs on countries across the globe, which have accelerated the process of “de-dollarization” in international trade.
This shift could reinforce gold’s appeal as a core asset class in some investors’ portfolio playbook.
“Gold remains a standout asset class as the market heads into the third quarter, offering both a potential hedge against geopolitical chaos and an escape from fiat-currency erosion,” said David Miller, CIO of Catalyst Funds.
Another critical factor is demand from central banks, reflecting growing unease about the power of the U.S. dollar. But gold has its quirks. Warren Buffett famously quipped:
“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
Gold does not produce income. It does not innovate. It just sits there. And while gold tends to keep up with inflation over the very long run, it is not immune to busts. After peaking in 2011 during the Eurozone crisis, gold prices tumbled nearly 40% from 2012 to 2013 as inflation fears waned and investor enthusiasm cooled. (see chart.) Over time, gold may just keep up with inflation.
Gold has historically spiked during crises but underperformed stocks during extended bull markets. Over decades, equities have outpaced gold by a wide margin.
This is not to say gold is worthless in a portfolio. A modest allocation, say 5 to 10 percent, can act as a psychological anchor and diversifier during turbulent times. But going all-in on shiny metal risks missing out on growth opportunities elsewhere.
The Portfolio Perspective
It’s one thing to buy a gold Rolex because you like how it looks. It is another to build your retirement plan around shiny objects. Bitcoin might be fun to own too, but only if you are prepared for its wild volatility and understand it is not a replacement for disciplined planning.
Here is the bottom line. Bitcoin and gold might have roles in a diversified portfolio, but they are not magic bullets.
- Bitcoin: Highly speculative and volatile. Institutional clout is growing, but practical utility remains limited.
- Gold: A hedge and emotional buffer, effective in moderation but unreliable as a growth engine.
- Combined value: These assets can complement, but not replace, core holdings like stocks and bonds.
We generally recommend keeping riskier extras like crypto or precious metals in the 5%-10% That allows room for upside without risking your financial foundation.
Putting It All Together
You cannot shortcut your way to financial freedom by chasing the latest shiny trend, whether it is Bitcoin, gold, or whatever is lighting up CNBC this week.
What should matter to a long-term investor is their overall portfolio and whether it aligns with their long-term financial goals. Assets like Bitcoin, gold, silver, and even copper underscore both their potential benefits and the importance of thoughtful allocation decisions. At the very least, these assets should complement, not replace, diversified holdings in stocks, bonds, and other core asset classes.
The bottom line? At Ulin & Co., we believe real wealth isn’t built on speculation. It comes from balance, discipline, and thoughtful allocation. Whether you have a gold bug or Bitcoin mania in your brain, both may have a place in your portfolio, but only as complements- not replacements for diversified core holdings.
While many assets are in the news due to their recent rallies, investors should avoid chasing short-term performance. Instead, understanding each asset’s unique characteristics is the best way to align portfolios toward long-term success.
For more information on our firm or to request a complimentary investment and retirement check-up, call (561) 210-7887 or email jon.ulin@ulinwealth.com.
Author: Jon Ulin, CFP® is the founder and Managing Principal of Ulin & Co. Wealth Management, an SEC Registered Investment Advisor based in South Florida for over 20 years. As a fiduciary wealth advisor, Jon helps successful individuals, families, and business owners nationwide with multi-generational planning, investment management, and retirement strategies. Learn more about Jon and our team at About/CV.
Note: Diversification does not ensure a profit or guarantee against loss. You cannot invest directly in an index.
Information provided on tax and estate planning is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
You cannot invest directly in an index. Past performance is no guarantee of future returns. Diversification does not ensure a profit or guarantee against loss. All examples and charts shown are hypothetical used for illustrative purposes only and do not represent any actual investment. The information given herein is taken from sources that are believed to be reliable, but it is not guaranteed by us as to accuracy or completeness. This is for informational purposes only and in no event should be construed as an offer to sell or solicitation of an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as NewEdge Advisors, LLC does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors.
