- Bitcoin bulls like to claim that bitcoin is a great haven investment, like gold, in times of geopolitical uncertainty.
- “These people ignore all the times that it moves inversely with sentiment,” says Oanda’s Craig Erlam.
- “Bitcoin is not gold and certainly not gold 2.0,” he said.
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Bitcoin bulls like to claim that bitcoin is a great haven investment, like gold, in times of geopolitical uncertainty. Traders fleeing from risky trades when global turmoil increases tend to flock to seemingly safe, solid bets like gold.
Online forums and financial publications have pushed the idea of bitcoin behaving in similar ways to those assets, especially in the past week, as US-Iran tensions escalate over the assassination of Qassem Soleimani. Bitcoin since the beginning of the year has soared about 10%.
However, one analyst said Tuesday that the idea bitcoin is a safe haven is a fallacy.
“I’ve long been a ‘bitcoin is a safe haven’ skeptic and the last few days hasn’t changed anything,” Craig Erlam
senior market analyst at Oanda in London, said in an email.
“There are those out there that will claim that the cryptocurrency has rallied since Friday — which it obviously has — but there is nothing out of the ordinary about the move in bitcoin. “
“We’ve not even broken the range it’s broadly traded within for the last month,” he said.
“There’s a desperation among crypto fans for bitcoin to become the new gold, but these people ignore all the times that it moves inversely with sentiment,” Erlam told Markets Insider.
“Even if you look at the gold chart against bitcoin, at times it looks inversely correlated.”
“One day, who knows. In certain situations — Argentina, Venezuela etc. — perhaps there’s a case,” Erlam said. “But bitcoin is not gold and certainly not gold 2.0. At the moment, it’s a toy that has the potential to be more, but that’s all.”
See Oanda’s chart below. Gold is represented by the yellow line, bitcoin, by the purple.
“The evidence isn’t there, and fundamentally, it’s too volatile and unpredictable to even be considered,” Erlam concluded.
Oanda via Reuters