The wild price swings and the increased regulatory scrutiny are a bad mix for BTC As now gold outshined BTC during the latest market price volatility as we can see more in our latest Bitcoin news today.
The prospect of regulatory scrutiny and the strong volatility is diminishing the BTC’s claim to rival gold as a portfolio hedge. Analysts across the world said that the recent drops of 30% have been a wake-up call for investors. The one-day price swings of over 30% and the increased regulatory scrutiny mean that the shine is coming from gold this time, as a store of value. Bitcoin’s potential to be a better portfolio hedge than the gold one has been bolstered by the performance in the past year and that’s why gold outshined BTC and other assets as well.
While many investors expected a rebound from last week, Bitcoin (BTCUSD) fell 25% with a slew of negative catalysts. Source Tradingview.com
Events like the ones we saw a week ago including Elon Musk’s criticizing of BTC’s energy consumption and China reiterating its stance on crypto, saw BTC drop 40% from the record high of over $63,000 and upset most of the traders. JPMorgan Chase reported that larger institutional investors dumped BTC in favor of gold and they based their findings on the open-interest data in BTC futures contracts from the Chicago Mercantile Exchange but the bank held firm to its predictions that BTC is on track to hit $140,000 in the long-term. Edward Moya who is a senior market analyst said:
“This week’s crypto plunge and rebound was a wake-up call.”
Societe Generale analyst Alain Bokobza and Arthur Van Slooten wrote:
“It comes as no surprise that the place of Bitcoin in any investment portfolio remains highly contested, precisely because of its erratic price movements.”
The proponents of digital gold theory argued that BTC shares key characteristics with gold and most often they point to its capped supply. BTC however and its drop this week means its 60-day realized volatility is higher and it is rising. BTC then dropped 31% before recovering and ending the day close to the price that it began. Gold saw gains for three weeks in a row and analysts said it has even benefited from the crashing market. However, since 2021 started, spot prices on gold dropped over 1% while BTC is still up at 38% in a similar period.