BitcoinSpotlight

Bitcoin’s “Digital Gold” Tag Put to Test As Gold Price Spikes

The geopolitical unrest across the globe has led to an increase in intensity regarding currency competition. The US-China trade war, US-Iran feud alongside the worsening Hong Kong protests are all contributing towards building an uncertain environment in global finance. In order to avoid any kind of risk, people are reverting to gold as its price is climbing up steadily. At the time of writing, gold’s price per ounce stands at $1,526 while showing a staggering 15.90% upward change.

Despite gold’s upward swing amid the tensions, the alternative to it in the crypto space, bitcoin, is not seeing as much growth as expected by its proponents. Firstly, this exposes the lower correlation of bitcoin with gold and secondly, it shows that despite the progress that bitcoin has made in the past few years, the trust regarding this digital asset is still not significant enough across the globe.

Due to its role as a store of value, bitcoin is often termed as the “digital gold” by its proponents. Since there is no physical backing of this digital gold, its price is excessively prone to media hype as it is based on speculation. In the hindsight of the increasing global currency competition with even Facebook’s currency Libra getting ready, gold is witnessing its fair share of growth as people revert to save their assets from any kind of sudden recessive situations. Gold should have taken bitcoin up along with it as the uncertainty rises but bitcoin is showing a relatively steady attitude standing at around $10,146, at the time of writing, while showing a 0.95% drop in the past 24 hours.

As recently pointed out by eToro’s senior market analyst Mati Greenspan regarding the absence of bitcoin’s correlation with gold, the stock market, and the USD:

With everything above, one might expect bitcoin to come in as a hedge and react to things like trade wars and or rate cuts, but the data suggests otherwise.

READ ALSO: Bitcoin’s Correlation with Gold Amid US-China Trade War

Although the blockchain and bitcoin world has come a long way from where it started back in 2009, acceptance of cryptocurrencies at the lowest level of finance, the users, is still very low. Bitcoin emerged as a peer-to-peer electronic cash system but over time it has shifted more towards the “store of value” side of things The initial use-case of bitcoin was largely driven by its employment in illegal networks such as the dark web, money laundering, etc. but the increased attention has put it out in front of the broader financial world and regulatory bodies.

While regulations are still missing from its ecosystem with it being a technological innovation, negative factors have found their way into its world. Many investors have fallen prey to scams in bitcoin’s world and issues like volatility and price manipulations still plague it to a certain extent despite all the inflow of intellect and capital. These are some of the possible reasons why bitcoin has not been able to establish a more credible image around itself in the media and the general public. The negative connotation thwarts the asset from getting global trust as a store of value.

The “digital gold” tag of bitcoin is now surely put to test as gold has rallied up in its price. Although bitcoin has already risen considerably from its early-April prices, it remains to be seen if it is able to break its thwarted bull-run and prove itself to be a “trusted” store of value across the globe as geopolitics shifts its dimension and gold rises in the price ranks.

READ ALSO: Will Bitcoin (BTC) Ever Get Rid Of “The Digital Gold” Title?

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Ahsan Khalid

Blockchain Developer. An Electrical Engineer with majors in software development. I present forward my insight regarding the latest happenings of the blockchain world. All views on my articles are my own. Email: ahsan@blockpublisher.com or editor.news@blockpublisher.com

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