Bitcoin's "Digital Gold" Myth Crumbles Amidst Israel-Iran Tensions, Gold SoarsAs tensions escalate between Israel and Iran, Bitcoin (BTC) has experienced a crash, raising questions about its ability to mimic gold as a hedge against geopolitical turmoil. Renowned precious metals analyst Peter Spina, in an October 2nd X post, expressed disappointment in Bitcoin's recent price action, claiming its "digital gold" promise has been shattered
Bitcoin's "Digital Gold" Myth Crumbles Amidst Israel-Iran Tensions, Gold Soars
As tensions escalate between Israel and Iran, Bitcoin (BTC) has experienced a crash, raising questions about its ability to mimic gold as a hedge against geopolitical turmoil. Renowned precious metals analyst Peter Spina, in an October 2nd X post, expressed disappointment in Bitcoin's recent price action, claiming its "digital gold" promise has been shattered.
Spina underlined his argument by comparing the price trajectory of Bitcoin and gold in recent years. Data reveals that while Bitcoin surged during the cryptocurrency bull market in 2021, it has since experienced a significant slump. The Bitcoin-to-gold ratio peaked at 37.53 in 2021 before plummeting approximately 22.60% to 42. Meanwhile, gold has maintained a steady rise, reaching above $2,600 per ounce as of October 2024.
"Yesterday [October 1st] was another day proving that the 'Bitcoin' 'Digital Gold' narrative is totally dead," Spina asserted. He suggested that the current scenario presents a "prime window" for investors to reallocate funds into physical gold and silver before mainstream investors realize they're holding "gambling tokens."
Further reinforcing the potential demise of Bitcoin's "digital gold" myth is its failure to sustain momentum after breaking the $70,000 mark. Prior to the decline, market expectations were widespread that the digital asset would rally further, even surpassing its all-time high, aligning with the historical "Uptober" phenomenon. However, reality proved to be quite different.
Cryptocurrency analyst Bitcoinsensus pointed out that Bitcoin was trading at $61,104, down 4% for the day at the time of publication, with potential for further correction. Bitcoin's failure to reclaim the 0.618 Fibonacci level (around $65,000) serves as a cautionary signal of a potential further downtrend.
Despite this, Bitcoin proponents remain steadfast in their belief in the asset's potential to rival gold, arguing that Bitcoin is still in its early stages, and developments such as the launch of spot Bitcoin exchange-traded funds (ETFs) will pave the way for it to become "digital gold."
Conversely, economist Peter Schiff also questioned the long-term investment case for Bitcoin. He highlighted that gold prices have soared during the escalating Israel-Iran conflict, reaching record highs above $2,600, with some market participants predicting a potential breach of $3,000.
Analysts at GoldPredictors pointed out that gold's price action underscores the lack of a topping pattern, further strengthening expectations for continued gains. Since the March rebound, several bullish forces have supported gold prices, and the recent consolidation phase only serves to increase the strength of the uptrend.
While potential for continued upside exists, Finbold reported that analysts are also exhibiting caution in their outlook for gold. They noted that based on technical prospects and its correlation with the U.S. presidential election, gold might undergo a correction in the coming days.
Given the current momentum, often described as historic, other players believe gold might be signaling a black swan event to the market.
In the backdrop of escalating Israel-Iran tensions, Bitcoin and gold are exhibiting contrasting trajectories. Bitcoin's "digital gold" promise appears fragile under market scrutiny, while the safe-haven asset, gold, demonstrates a strong upward trend. This indicates investors are re-evaluating asset allocation strategies, seeking a more secure investment haven amidst heightened geopolitical risks.
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