After an impressive performance in 2024, Bitcoin is now facing downward pressure as rising geopolitical tensions and the prospect of Donald Trump’s return to the White House push investors toward traditional safe-haven assets like gold. Year-to-date, Bitcoin has gained just over 3%, significantly lagging behind gold, which has surged 9% to reach a record high of $2,882 per ounce. The spike in gold’s value follows comments by Trump on February 4, suggesting the U.S. could take control of Gaza, a remark later downplayed by his aides. Bitcoin, meanwhile, is approximately 10% below its recent peak.
While Bitcoin is often touted as a store of value, similar to gold, due to its inherent scarcity — with a supply limit of 21 million — it has not fully lived up to that reputation. Gold’s enduring appeal during times of global uncertainty, such as the U.S.-China trade war and the ongoing tariff threats, continues to solidify its position as a safe haven. In contrast, Bitcoin has often mirrored the movements of technology stocks, lacking the stability of gold in times of turmoil.
Bitcoin’s potential as a hedge against fiat currency remains limited in an environment where the U.S. dollar is in high demand. Aoifinn Devitt, Senior Investment Advisor at Moneta Group LLC, discussed this dynamic with Bloomberg, stating, “In time, Bitcoin will develop its own characteristics separate from markets, but at this point, it is behaving as the riskiest of risk-on assets.”
Despite the current volatility, Bitcoin proponents remain hopeful that the cryptocurrency will eventually behave more like a traditional store of value. The introduction of exchange-traded funds (ETFs) that invest directly in Bitcoin could play a role in stabilizing the market by reducing volatility. Paul Howard, Senior Director at market maker Wincent, suggested that these ETFs might encourage investors seeking volatility to shift toward riskier cryptocurrency assets, which could further contribute to Bitcoin’s maturation.
Related topics:
Gold Steadies Near Record Highs Amid Economic and Geopolitical Tensions
U.S. Dollar Weakens Amid Global Trade Calm and Rate Hike Expectations
