At the start of the weekend, Bitcoin abandoned double-digit gains from the start of the week to fall below a critical psychological marker of $40,000. Data from Santitment charts the contest between Bitcoin and the former as the premier store of value as the world continues to experience uncertainty.
📉 As the week comes to an end, #Bitcoins fell back to $38.9k, while the #SP500 followed suit. Their correlation remains relevant when $BTC may burst again. Meanwhile, #gold rose to the same level as when #war the news has come. https://t.co/soFXrWy0Yb pic.twitter.com/lFMn1kFYBg
— Santiment (@santimentfeed) March 4, 2022
Overlaying the charts, it is clear that as the likelihood of war increased, Bitcoin and S&P fell, while gold rose almost 4%.
Bitcoin vs Gold 2022
As Russia invaded Ukraine, the trend accelerated as gold hit its highest price since August 2020. However, supposedly the superior store of valueBitcoin, fell 14% intraday.
The meteoric rise of gold and the fall of Bitcoin on February 24 was not the end of the story. Gold gave up gains almost immediately and Bitcoin rose over 17% as Ukraine announced it would be accepting Bitcoin and Ethereum donations. Cryptocurrency donations to Ukraine were instantly liquidated to transact in fiat. The government does not hoard cryptocurrency. Instead, he sells when he receives the funds in his wallet. The need to finance the war effort creates selling pressure in the market.
The roller coaster continues this weekend. Today, gold moved past Bitcoin as it climbs back towards the local high of $1,974. However, gold is only 5% off its all-time high, a marker that will likely act as a strong resistance level. Meanwhile, Bitcoin is trading closer to the all-time support levels of $37,700 and $35,254. What happens next will be interesting to watch, but does all of this really affect the argument that Bitcoin is the primary store of value?
What is the superior store of value?
The argument between gold and Bitcoin as a store of value has been raging for years. However, while Bitcoin’s growth potential clearly demonstrates that it has the ability to outperform gold, it has yet to be truly tested as a true store of value in turbulent times.
Peter Schiff said yesterday:
“Bitcoin is far too risky to be used as a safe haven or store of value. Bitcoin has failed its first major test.
Is the famous Bitcoin critic right? Could this be a pivotal moment for Bitcoin?
#Russians who seek to store their wealth in an asset that governments cannot seize choose #gold more than #Bitcoins. Bitcoin is far too risky to be used as a safe haven or store of value. Bitcoin has failed its first major test. I don’t think he will get a second chance!
— Peter Schiff (@PeterSchiff) March 4, 2022
Looking at microeconomic events on individual days to make statements about a long-term store of value is simply wrong. We need to zoom out and look at the pace at which the blockchain space is growing. We plan to reach a global market of $67 billion in just four years. This represents a compound annual growth rate of 68.4%. Additionally, Bitcoin can be sent to families, friends, and charitable causes from anywhere in the world.
While gold has been the global store of value for millennia; We can transfer the value of Bitcoin to loved ones in minutes. You cannot send physical gold to your family via your mobile phone.
This opens the debate on what constitutes a store of value in 2022? If a store of value protects us from daily market volatility, then the chart above shows that neither gold nor Bitcoin pass the test. On the other hand, if a store of value is something that persists or grows over a long enough period of time, well, I don’t think Bitcoin has failed that test yet.
Isn’t a digital store of value the most sensible option in an increasingly digital world?
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