As Bitcoin Plummets, Gold's Value Continues to Break Records

Bitcoin Plunges, Gold Breaks Record

In recent days, Bitcoin has plunged 5% in the markets, raising investor concerns, while gold has risen almost 5% to a new record high. This divergence between the two assets has been a major factor in institutional investors turning to gold amid macroeconomic uncertainty.

Macroeconomic Uncertainty and Safe Haven Tendency

The downtrend in Bitcoin accelerated after last week's Fed rate decision. Gold, on the other hand, showed strong increases in this process, rising as high as $ 3,791. Experts attribute this performance difference to changes in risk appetite caused by macroeconomic uncertainties.

Bitcoin is often referred to as "digital gold", but it seems to have failed to keep pace with gold's bullish momentum in the current period. Farzam Ehsani, CEO of the VALR crypto exchange, said strong demand from governments and central banks has also contributed to gold's strength. This is mainly due to the strategies of countries such as China and Russia to use gold as a hedge against geopolitical uncertainties.

Institutional Investors' Preferences

Ehsani says Bitcoin is still in the early stages of institutional adoption, and investors are skeptical about whether the crypto asset deserves the label "digital gold". According to BOLD Report data, the differences between inflows into gold and Bitcoin funds are striking. As of September, gold had attracted around $18.5 billion in capital, while Bitcoin ETF inflows stood at $10 billion.

Historical data shows that Bitcoin's performance has generally improved in response to Fed interest rate cuts. There have also been periods when crypto assets have outperformed traditional safe-haven assets. In this context, as Merkle Tree Capital's chief investment officer put it, "Gold moves first, Bitcoin follows 1-2 months later."

In private capital flows, where risk tolerance has increased, Bitcoin has generally outperformed gold as it accounts for about a tenth of the market capitalization of gold, and sustainable increases in cryptoassets are expected.

The information contained herein does not constitute investment advice.