Gold is suddenly attracting all the attention, with the yellow metal’s price nearing a record of over $2,000 an ounce as the Russia-Ukraine war escalates.
Now, crypto investors are asking what it might mean for bitcoin (BTC). After all, the largest cryptocurrency by market value has been cast by some analysts in recent years as a potential rival to gold and its perceived status as a “safe haven.”
The answer is that bitcoin is still viewed as a technological innovation whose performance as a global macroeconomic asset is still in question.
“The uncertainty levels are off the scale at the moment,” said Jason Deane, an analyst and adviser at Quantum Economics. “The default setting is, ‘Go with what you know,’ which in this case means gold.”
Gold prices have climbed about 8% in the past two weeks, while bitcoin has barely budged during Russia’s invasion of Ukraine that developed into a full-scale war.
Crude oil prices shot past $120 a barrel when U.S. President Joe Biden announced plans to join the U.K. in banning Russian imports of fossil fuels. Gasoline prices are jumping along with the price of commodities from nickel to palladium and wheat. Stocks have tumbled as risks mounted to the global economy.
“Everyone has been just jumping on the gold trade,” said Edward Moya, senior market analyst with Oanda. “Bitcoin is sitting this rally out.”
“It is behaving more like a risk asset and it is starting to follow the moves of equities more than these high-flying commodities,” Moya said.
The gold buff Peter Schiff, a well-chronicled bitcoin skeptic, couldn’t resist chiming in on Tuesday:
Lucas Outumuro, head of research at IntoTheBlock, told CoinDesk: “It seems like investors are treating bitcoin and gold very differently, with their correlation dropping to the lowest in over six months.”
“Bitcoin is still being priced as a risk asset and not yet as the safe haven many once thought it would be,” Outumuro added.
Some analysts believe bitcoin may eventually come to be accepted as a safe haven, and its current correlation with the stock market will prove temporary.
“Bitcoin is still a nascent asset technology, and it’s going down because of that,” said Mike McGlone, senior commodity strategist for Bloomberg Intelligence. “But it’s in transition from a risk-on asset to a risk-off asset. That’s what I see happening.”
Lyllah Ledesma contributed to this article.