As gold established a new peak performance, hitting over $3,390 recently, attention turns to the crypto market, particularly Bitcoin, questioning if a parallel surge is imminent.
The precious metal climbed significantly on April 21, exceeding $3,390 and briefly touching $3,395. Market watchers suggest this ascent is fueled by investors seeking stability amid global economic shifts, including international trade uncertainties and a weakening U.S. dollar, which recently hit a multi-year low.
Heightened global trade tensions, exemplified by potential U.S. investigations into critical mineral imports, contribute to market anxiety. This unease often drives capital towards assets perceived as safer alternatives to traditional fiat currencies.
Historically, Bitcoin has often mirrored gold’s trajectory, earning it the nickname “digital gold.” Both assets are favored by some investors as hedges against economic instability and inflation, largely due to their finite supply and detachment from traditional financial systems.
[Price chart comparing the movements of Bitcoin and gold on the market, April 21, 2024 | Source: TradingView]
Supporting this trend, Bitcoin recently achieved a new monthly high, surpassing $87,570 on the same day gold peaked. At the time of reporting, BTC showed a gain of over 3.2% in 24 hours, trading around $87,538. This level hadn’t been seen since late March, indicating renewed momentum after an early April dip.
The Gold vs. Crypto Connection Explored
The comparison between Bitcoin and gold is well-established among market participants. Federal Reserve Chair Jerome Powell has previously acknowledged Bitcoin as a competitor to gold, noting both function more as stores of value than transactional currencies.
Furthermore, Cathie Wood, CEO of ARK Investment Management, has projected that Bitcoin’s market capitalization, currently around $2 trillion, could eventually eclipse gold’s estimated $15 trillion valuation (based on a $2,700/oz price point referenced in her analysis). Wood highlighted Bitcoin’s rapid growth, reaching a significant market cap much faster than gold.
“Even after breaking through $100,000, Bitcoin still is in early innings,” Wood remarked, comparing gold’s $15 trillion market size (at $2,700/oz) to Bitcoin’s $2 trillion.
While both are considered safe havens, their market dynamics differ. Gold generally exhibits lower volatility, typically ranging from 10% to 20% annually. In contrast, Bitcoin’s price swings are often much larger, sometimes exceeding 50% annual volatility, according to market analyses.
Despite these differences in price stability, observers note that significant Bitcoin market trends often appear to follow gold’s movements, usually with a lag of a few months. This pattern keeps investors watchful whenever gold makes a major move.