Gold is approaching all-time highs, while bitcoin struggles not to collapse.
War conflicts increase the state of global tension.
This week has been marked by the escalation of the war conflict in the Middle East. The territories of Israel, Lebanon, Iran and other nations in the region were the scene of military ground and air raids. Likewise, the war between Russia and Ukraine is extending longer than expected and there does not seem to be a peaceful outcome in the near future.
In this context that presents an uncertain economic outlook, a traditional reserve of value such as gold increases its pricetrading at historical maximum prices, as can be seen in the following graph of TradingView:
And what about bitcoin? He should be doing well. After all, it is considered by many to be “digital gold.”
Well, not exactly (at least, if you consider the short term). Businessman Jeroen Blokland wrote on his X social media account on Tuesday: “Investors are literally selling bitcoin to buy gold as geopolitical tensions rise.”
This individual, who runs the company ‘Blokland Smart Multi-Asset Fund’, an investment management company, accompanies his statement with a graph in which you can see how that day the price of gold shot up, while that of bitcoin he “collapsed.”
The following is the graph shared by the businessman:
Bitcoiner Samson Mow, regretting that something like this is happening, wrote on the same social network: “Imagine trying to protect yourself against a war by selling bitcoin to buy paper gold that you can’t move anywhere in the event of a real war.”
Given all this, it is useful to ask whether Blokland’s interpretation of the graph is correct. Are investors “literally selling bitcoin to buy gold”? The short answer is: not necessarily.
It is true that on October 1, when the war in the Middle East escalated to new heights, there was greater supply than demand in gold and the opposite occurred with bitcoin. Does that mean that the same investors who sold bitcoin went to buy gold? Once again the answer is: not necessarily. Correlation does not imply causation.
In order to reach a conclusion like the one the businessman does, much more data would be needed than the simple comparison of price graphs of two assets.
Bitcoin is perceived as a risk asset (for now)
But, let’s not be unfair to Blokland. Beyond the exaggeration of its publication, it is true that gold and bitcoin showed to be perceived differently by the market.
While gold is evidently considered a safe haven asset in chaotic times, bitcoin is operated as if it were a “risk” asset.
On May 3, CriptoNoticias published an explanation about this, which is titled “Why is bitcoin said to be a risk asset?” There it is explained, among other things, that the high volatility and the youth of BTC are two characteristics that favor this classification.
Probably, the market, in general (of course there are exceptions), has not yet understood that certain intrinsic properties of bitcoin, such as its scarcity, its ease of transport, its decentralized mining, etc., make it an interesting means of preserving the wealth. Hence its qualification as “digital gold”.
This means that bitcoin is still in an early stage. The world hasn’t discovered it en masse yet (although most people have probably already heard that there is such a thing as “bitcoin”).
Says Alex Thorn, head of research at investment company Galaxy Digital: “Unlike gold, bitcoin is not yet widely held by central banks or institutional investors.”
It is possible that as BTC adoption increases, more and more investors and savers will understand why bitcoin matters. As this occurs, The narrative of bitcoin as a “risk” asset will progressively give way to the narrative of bitcoin as “digital gold.”.
Meanwhile, those who have already understood this can take advantage of each price drop to accumulate more sats.
