Bitcoin or gold? Or Bitcoin and gold? Investors are currently considering where to allocate their funds in times of uncertainty, and there is no time more uncertain than the present.
President Donald Trump’s tariffs or the mere threat of them have caused upheaval in the markets, resulting in a decreased appeal for “risk-on” assets like cryptocurrencies.
While the price of gold reached a new high on Monday, Bitcoin saw a drop below $9,300, marking a 14% decrease from its all-time high on January 20. According to experts interviewed by Decrypt, the correlation between Bitcoin and the precious metal has significantly reduced as investors turn towards more traditional safe haven assets.
Bitcoin advocates have long touted the cryptocurrency’s unique selling point as being a long-term store of value, similar to gold. At times, they have exhibited correlation, with both assets moving in tandem when investors sought the refuge of a strong dollar.
However, the present situation is uncertain due to President Donald Trump’s assumption of office and the issuing of a series of dramatic orders. Data provider Kaiko informed Decrypt that Bitcoin’s 90-day correlation with gold has remained close to zero.
A case in point would be the implementation of tariffs against Canada, Mexico, and China on Saturday, which resulted in a sharp drop in cryptocurrency prices. However, after engaging in a “friendly conversation” with Mexican President Claudia Sheinbaum two days later, President Trump decided to pause the tariffs, leading to a rebound in Bitcoin’s price. Meanwhile, gold experienced a surge. Trump later agreed to a similar pause with Canada as the two countries seek to negotiate a deal, but the tariffs against China did ultimately take effect.
“The trade war could potentially decouple the correlation in the short term as gold is a more established ‘safe haven’ asset, while Bitcoin, although often perceived as a safe haven, is currently owned by a large investor base that also trades highly speculative risk-asset meme coins and tech stocks,” said Greg Magadini, the director of derivatives at Amberdata, in an interview with Decrypt.
The reason for the decoupling is that Bitcoin is still behaving more like a risk asset, such as tech stocks, rather than a safe haven. CoinGecko shows that the largest cryptocurrency by market capitalization has swung from $105,893 per coin to as low as $92,876 in just the past seven days.
“While Bitcoin has undoubtedly attracted investors as an alternative store of value, its higher volatility makes it less dependable in times of economic uncertainty compared to gold,” said Michael Petch, the co-founder and president of the gold investment platform Argo, in an interview with Decrypt.
Some, including Wall Street titan BlackRock, argue that Bitcoin is still finding its place as an asset. Despite its long-term gains far surpassing those of gold, the physical asset with a history of 5,000 years remains the go-to safe haven during times of chaos.
“Investors dislike uncertainty, and Donald Trump brings a lot of uncertainty,” stated Michael Lebowitz, a portfolio manager at RIA Advisors, in an interview with Decrypt.
Editor’s note: This story was updated after publication to correct the title of Michael Petch.