The Bitcoin (CRYPTO: BTC) price is down 5% over the past 24 hours, currently trading for US$37,273 (AU$51,753).
Gold has gone the other way.
Bullion notched up another 0.4% overnight to trade for US$1,910 per troy ounce. That’s the highest gold price since August 2020.
Gold – and ASX gold shares – have been benefiting from increasing geopolitical uncertainty, and sliding when that uncertainty recedes.
The Bitcoin price, on the other hand, has tended to fall hard when investors look to park more of their money in perceived haven assets.
US-Russian summit proposal sent Bitcoin price higher
In yesterday’s trading, most ASX gold shares were well into the green in late morning trade even as the All Ordinaries Index (ASX: XAO) sold off. The Bitcoin price was also down 4% over the previous 24 hours.
Then news hit that United States President Joe Biden and Russian President Vladimir Putin may meet for a face-to-face summit to defuse the chances of war in Ukraine.
As we reported here yesterday, gold shares sold off intraday while the All Ords rebounded.
What we didn’t report was that the Bitcoin price also leapt 2% higher on the news.
Which brings us back to Bitcoin’s concession to gold as the go to haven asset in times of turmoil.
An unlikely substitute for gold
In a report released last month, the International Monetary Fund (IMF) noted that the Bitcoin price moves were much more in line with risk assets than haven assets like gold or investment grade bonds.
According to the IMF report:
Stronger correlations suggest that Bitcoin has been acting as a risky asset. Its correlation with stocks has turned higher than that between stocks and other assets such as gold, investment grade bonds, and major currencies, pointing to limited risk diversification benefits in contrast to what was initially perceived.
Kanish Chugh, head of distribution at ETF Securities, also doesn’t believes that the Bitcoin price moves make it an unlikely alternative investment to the likes of gold.
According to Chugh (quoted by The Australian):
Our view is that bitcoin has merits as an investment. It’s a growth alternative. However, it is unlikely to function as a substitute for gold. Bitcoin is much riskier than gold and rarely regarded as a safe haven. Gold is clearly a defensive alternative.
The gold price is up 4.5% so far in 2022, while the Bitcoin price has fallen 22.4%.
The post Have Bitcoin price falls cemented gold as the best safe-haven asset? appeared first on The Motley Fool Australia.
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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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