Is Bitcoin really a “safe haven” asset? Gold vs Bitcoin shows something else

by Patrick Gon
Bitcoin Gold

The strong collapse of BTC begins to raise doubts about the fact that Bitcoin is like gold, a good refuge par excellence. 

Several analysts are pointing out that the Bitcoin movement is in line with what is happening and has happened in the stock markets. Yesterday the Italian index closed with the worst loss ever, even the US index asked for a highly volatile session with losses that have not been recorded since 1987

But yesterday was also a bad day for gold, which with the collapse of yesterday’s prices recorded a loss of about 9% from the highs recorded only 5 days ago, on March 8th. 

With yesterday’s collapse, gold, a sovereign risk protection asset, also marks one of the most intense bearish movements ever and this highlights how yesterday was a historic day for the tensions that are affecting the sector at a social and health level. All this has had a negative impact on Bitcoin. 

It is not new for Bitcoin to have these strong fluctuations on a daily basis, but this has happened in a different and new context. 

It is the first time that cryptocurrencies are in a phase with financial markets under stress. Bitcoin had to prove that it is like gold, which even if it has lost 9% has returned to the levels of the beginning of the year. Bitcoin, on the other hand, has wiped out a year of hikes. 

What is happening in the last few days must be differentiated between BTC and gold. Since mid-February, Bitcoin has been dangerously aligned with the equity indices and in particular the US reference S&P 500 index . 

It is a mirror movement, a photocopy, contrary to what is happening with gold. Bitcoin has suffered a loss in value from the highs recorded on February 12th. This highlights that the movement of the last few hours is due to speculation and coatings that move capital and balance very quickly in a context already set to the downside, unlike what happens when looking at the gold chart. 

Gold also had a loss similar to that of these days between mid and late February when, after having updated the records of the last 7 years, reaching almost 1,700 dollars, then falling to 1,560 dollars on February 24, it then recovered the prices until yesterday’s movement. 

At the end of February there had been a similar movement for Bitcoin too, only that gold recovered the highs of the period, while BTC continued in a slow and constant descent that exploded in the last 48 hours. This differentiates it from the gold that has maintained and continues to maintain a positive balance since the beginning of 2020 despite the sinking of the last few hours. What happened on Bitcoin changes the appearance and perception of investors. 

In a fully sell off stock market, a chain effect on other assets can also be expected, also due to the coverings of operators seeking liquidity to meet margin call requirements. But as happened yesterday for gold and for a few days on both gold and BTC, a drop in value is expected from a safe haven asset , even by 9% in a few hours, not a collapse of equal magnitude as occurred a these last hours on Bitcoin.

It is true that Bitcoin is not the first time that has experienced sudden downward movements, but in such a violent scenario, from the highs of 6-7 March (which coincide with the higher highs of gold, while BTC recorded a lower maximum than that of mid February) Bitcoin marks a 5-day loss of over 50%. This raises some doubts . But this is not the time to get carried away by irrationality considering that the losses concern the whole sector of cryptocurrencies

Even Ethereum , with the loss that pushed prices to the lows of December 2018, is in a totally changed technical picture compared to that of last week. 

It will be necessary to understand and evaluate with attention and interest when volatility starts to fall again, if the prices have found a fund to start from, or they will confirm weaknesses and a real bearish trend and not just speculative coatings. 

This would change the structure that had been configured until recently. 

Advising to buy in a moment of weakness when there is such an important reversal is never wise. It is good to wait to understand developments from a technical and fundamental point of view in terms of prices, to evaluate what will develop in the coming weeks, also by virtue of the approach of halving that everyone expects and which will change the approach and the use that could differentiate the inflationary aspect that remains unchanged on Bitcoin, while instead the new and probable fiscal policies will further affect the fiat currency, primarily the dollar. 

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