Gold Proves To Be A Safe Haven Asset Amid Bitcoin Crash


The advantages of holding bitcoin over gold have been announced and discussed countless times. These two digital assets, one a physical asset and the other referred to as “digital gold,” compete head-to-head when it comes to which one is the best store of value. As the bitcoin crash erupted last week, the debate once again swirled around the merits of holding a relatively stable asset like gold over a volatile asset like bitcoin.

Gold provides cover

Over the past week, the price of Bitcoin has fallen by more than 30%. This created a sea of ​​red in the market as the rest of the cryptocurrency followed suit. During this time, the value of Bitcoin to date plummeted significantly. This put a digital asset that had been outperforming its physical counterpart for a long time behind it once again.

Related reading | Over $250M in Liquidations as Bitcoin Recovers Over $20,000

Despite gold returns throughout the year, it remained positive while the price of Bitcoin fell into the red. As of Tuesday, gold is up 0.6% year-to-date, putting it in the green. As for Bitcoin, the cryptocurrency is now down a whopping 55% year over year.

Bitcoin’s volatility has been a concern for those in the traditional finance market. However, it was also one of the biggest attractions for those who originally invested. It grew more than 50% last year to an all-time high of $69,000 before declining over the next six months to $17,600.

Bitcoin price chart from TradingView.com

BTC price trading below $21,000 | Source: BTCUSD on TradingView.com

While the sell-off rocked bitcoin, gold wasn’t a pity. So when it comes to the argument about which of these digital assets works as a better inflation hedge, gold has now come out on top as the cryptocurrency.

Bitcoin going down?

Bitcoin’s recovery streak has been encouraging over the past couple of days. After hitting the $17,000 low, the recovery has held steady since then, with the exception of a few dips here and there. With this said, a rebound above the 5-day moving average came for the first time last week.

Despite this, selling pressures remained high and the markets were shaken by more selling. However, support is starting to form above $18,000.

Related reading | Bitcoin Redemption Eliminates Centennial Liquidation, But For How Long?

There are also implications for the price of a digital asset to fall below the previous cycle’s high for the first time ever. It gave credence to the school of thought that the digital asset had not reached the bottom of its bear market. Combined with the fact that Bitcoin has previously fallen by at least 80% in all of its previous markets, the bottom is likely to reach around $13,000.

Additionally, the bottom is expected to occur about 15 months after the previous halving that set the bottom sometime in the fourth quarter of 2022.

Bitcoin is trading at $21,313 at the time of writing. It is up 1.93% in the last 24 hours with a market capitalization of $405.8 billion.

Featured image from Kinesis Money, chart from TradingView.com

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