Bitcoin falls in price while gold reaches a record high, showing the divergence between the two assets and raising questions about Bitcoin's role as "digital gold".
Bit (BTC) is fluctuating below the $85,000 threshold, increasingly diverging from the strong upward trend of gold in recent weeks. As the precious metal sets new record prices, reaching $2,983.36 per ounce, the question of Bit's role as a "digital gold" once again becomes urgent.
The world's largest cryptocurrency now shows a closer correlation with the S&P 500 and NASDAQ rather than gold, a traditional safe-haven asset during times of instability. Bit has recently dropped to $80,804.56, erasing its previous gains and facing significant selling pressure from investors as well as large-scale liquidation of long positions.
Gold affirms its position as a safe-haven asset in turbulence
While Bit is declining, gold has increased by 34% over the past year, with a particularly sharp rise in the last three months. Geopolitical tensions and growing demand from institutional investors have pushed gold prices to record highs, affirming the precious metal's position as a stable store of value.
The disconnection between Bit and gold reflects that Bit's status as a store of value is still affected by short-term volatility and speculative trading. Even long-time Bit supporters (maximalists) are questioning why the digital currency has not been widely recognized as a digital version of gold.
Bit's competitiveness with gold becomes even more difficult when considering market size. The total capitalization of gold has already exceeded $20 trillion. For Bit to reach an equivalent capitalization, the price of each Bit would have to reach $1 million - a seemingly unrealistic target in the current context.
The changing correlation between the two assets is also reflected in the exchange rate. In previous price peaks, 1 Bit could buy more than 1,000 grams of gold. However, with the strong rise of gold, the ability to buy gold with Bit has decreased significantly.
Notably, gold is not only rising in price on paper but also showing signs of increasing physical demand. The reserve inventory at the Comex has reached a peak of 1,250 tons, while gold demand in the US is pulling physical gold from European storage facilities, creating a sense of scarcity and continuing to drive prices higher.
The cryptocurrency market has tried to meet the demand for safe-haven assets through tokenized gold solutions, but this segment is still small, with a total value of only $1.8 billion, of which Tether's XAUT accounts for the majority of the market share.
While gold continues to affirm its position as the leading store of value asset, Bit needs a new price cycle or stronger acceptance from financial institutions to truly compete with this traditional precious metal in its role of protecting assets from market volatility.
