The recent cryptocurrency selloff didn’t shake pro-crypto bullish beliefs and one expert even claims that Bitcoin has historically outperformed gold during periods of excessive debt and leverage expansion in the financial system.
However, the selloff has tested, perhaps more than ever before, the long-held belief that Bitcoin plays the role of “digital gold” and should become part of one’s portfolio in order to protect against the volatility of the stock market.
Bitcoin to Outperform Gold, Hit $100K in 2024
The largest cryptocurrency recently fell below the key $63,000 level amidst a wider cryptocurrency market retreat that has knocked off about $200 billion from its total market capitalization during the weekend.
That compares with a two-month high of $66,500 hit last Friday that put BTC on track for a stronger last quarter this year. For now, though, surging geopolitical tension-most specifically in the Middle East-could provide a hurdle to risk assets like cryptocurrencies in the days ahead.
In the podcast, Natalie Brunell had Lawrence Lepard, an Investment Manager at Equity Management Associates, who proceeded to give his thoughts about the world’s situation, facing xcessive debt and leverage. According to Lepard, the existing financial system needs further expansion of leverage and money supply growth just to keep it going. He thinks that Bitcoin will be a much greater beneficiary of this dynamic than gold will ever be.
Lepard also compared it to 2019 and 2020, when BTC was changing hands between $5,000 and $10,000, and gold couldn’t get away from the $1,365 level.
He further explained that for the first time, even before the COVID-19 pandemic, gold broke out, followed by a very speedy movement of the price of BTC. Though gold went up some 50% to 70% during this time, the coin surged a much larger 300%.
In line with this, Lepard was quick to point out that the year was not yet over and remained optimistic, projecting that Bitcoin could reach six figures before the end of the calendar year.
Gold and Oil Prices Surge Amid Middle East Tensions
The latest reports show gold was up 1.4% on Tuesday to $2,665 an ounce, which was close to an all-time high, while crude oil prices were up 7% to $72 per barrel.
Events in the markets accompanied airstrikes across Israel, where its air defense had intercepted the majority of the 180 missiles launched. This hugely interrupted the crypto rally and boosted the price of gold as well.
Other beneficiaries included bonds and the dollar, underlining a deeper sense of investor nerves as geopolitics took hold.
Geopolitical Uncertainty Fuels Gold Rally
Be it as it may, the strongest cryptocurrency in the world is going through some hard times. As per the market expert and founder of the Blokland Smart Multi-Asset Fund, Jeroen Blokland, a global shift from Bitcoin towards Gold can be seen, and this movement is reflected within the BTG chart, which accounted for much of the current correction in the price.
Blokland takes Bitcoin price and its recent troubles and correlates that to rising tensions between Iran and Israel, which have worsened significantly in the past month. These, in turn, have posed some questions regarding investor confidence, and many seek gold as a historically stable asset that protects them from rampant market volatility.
Tensions ratcheted up Tuesday when missiles appeared to fire from Iran in the direction of Israel, prompting warnings from the White House. US officials signaled that Iran may be positioning itself to strike with a ballistic missile at any moment as fears have mounted of an expanded regional conflict. The White House was quick to reiterate its commitment to supporting Israel’s defense and threatened stern repercussions against Iran if the latter carried out a military attack.
This cocktail of economic uncertainty and geopolitical turmoil could mean that investors favor more traditional safe havens like gold, even if Bitcoin is billed as “digital gold,” placing further downward pressure on cryptocurrencies as fears of a world recession rise.
Teuta
Teuta is a seasoned writer and editor with over 15 years of experience in macroeconomics, technology, and the cryptocurrency and blockchain industries. Starting her career in 2005 as a lifestyle writer for Cosmopolitan in Croatia, she expanded into covering business and economy for several esteemed publications like Forbes and Bloomberg. Influenced by figures like Don Tapscott and Bruce Dickinson, Teuta embraced the blockchain revolution, believing crypto to be one of humanity’s most crucial inventions. Her fintech involvement began in 2014, focusing on crypto, blockchain, NFTs, and Web3. Known for her excellent teamwork and communication skills, Teuta holds a double MA in Political Science and Law, enjoys punk rock, chablis, and has a passion for shoes.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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