No More Digital Gold 🪙

No More Digital Gold

Bitcoin is often referred to as “digital gold” by its backers. The term refers to the idea that Bitcoin can provide a store of value similar to gold.

Down 23% in 2022, Bitcoin’s performance this year is even worse than the major US stock indexes, which themselves have been pummeled due to concerns about Fed rate hikes and the war in Eastern Europe.

While Bitcoin has started falling, gold has increased amid the market turmoil, leading many to dismiss the narrative of Bitcoin as a gold replacement and safe-haven asset.

Gold prices are hovering near eight-month highs, and last week gold gained for seven straight trading sessions. Bitcoin, on the other hand, continued to fall after Russia invaded Ukraine.

Since Russian President Vladimir Putin announced a “special military operation” in Ukraine, the world’s largest cryptocurrency by market capitalization has struggled to break above the $37,000 mark in the last 24 hours after dipping below $34,400 briefly earlier Thursday.

“Bitcoin has shown itself better at protecting against inflation expectations and less suited to protect against geopolitical risk – something that gold has proven, again, to be better suited for during this crisis,” said Gavin Smith.

Potential reasons for Bitcoin’s divergence include fears of over-regulation and an overall lack of education about the asset class. Some reports estimate that one-third of all cryptocurrency investors know little to nothing about what cryptocurrency is or how it functions.

Until those changes and investors get clarity on regulations, Bitcoin’s potential role as a safe-haven asset is likely to remain elusive.

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

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