Gold's Long Bull Run Exposes Bitcoin's Defensive Weakness

Mike Wilson, Morgan Stanley's chief US equity strategist and CIO, has been touting gold as a defensive asset in portfolios for years. What's new is his framing of it as a 25-year bull market. This perspective puts the 'digital gold' narrative back under scrutiny, particularly for crypto allocators who have to consider whether Bitcoin can provide the same defensive benefits.

According to Wilson, gold behaves differently when other parts of a portfolio break down. It's not just that it goes up, but that it retains its value even during times of crisis. A quarter-century bull market is long enough to cover multiple credit cycles, a global financial crisis, a pandemic, and several inflation scares.

Bitcoin, on the other hand, has struggled to decouple from risk assets when volatility spikes. While it's been touted as censorship-resistant, liquid, and global, its price action during sharp equity selloffs is more akin to a high-beta risk asset than a defensive one.

Wilson's framing suggests that Bitcoin may not be the go-to choice for investors prioritizing capital protection over upside capture. Instead, allocators might treat it as a hybrid: part commodity, part network equity, part monetary experiment.