For years, cryptoenthusiasts have dubbed Bitcoin “the new gold.” The argument usually goes something like this: “Like gold, Bitcoin can't be printed (mining is complex and supply limited),” or “Every four years, the mining reward halves, mimicking the scarcity of gold.” And yet, it has not behaved exactly like gold.
In turbulent times, Bitcoin has tended to fall along with other risk assets, while gold has typically strengthened. A clear example was last year's Iranian attack on Israel: as Bitcoin fell, gold prices rose. The pattern didn't change much afterwards: when the S&P 500, Nasdaq, and Dow Jones fell, Bitcoin plunged along with them.
It almost seemed like the case was closed: the myth of Bitcoin as a “digital safe haven” was debunked, and the narrative faded. But just because something didn't work in the past doesn't mean it can't work in the future. Paradigms shift, and the current conditions are perfect for that to happen.
Along with the nervousness in the stock market, the U.S. dollar index fell. Many interpret this as a loss of confidence in the dollar. With the price of gold already approaching record highs — close to $3,500 per ounce on Tuesday — the debate has resurfaced: maybe it's time to run to Bitcoin. After all, Bitcoin price won't “crash”... or will it?
As long as strong demand persists, it shouldn't, but it should always be remembered that Bitcoin is not backed by anything tangible like stocks. If the influx of new capital dries up, the pyramid risks collapsing. Unlike traditional assets, there is no underlying cash flow, dividend, or utility value anchoring the price.
Looking ahead, US Treasury yields are rising, which goes against the usual trend in times of uncertainty. This may indicate a breakdown of the traditional paradigm: Treasuries no longer look like a safe haven. In that environment, Bitcoin could have room to attract new minds.
On the other hand, if Trump doubles down on his protectionist rhetoric and continues to attack Fed Chairman Jerome Powell to push for rate cuts, Bitcoin could get another boost. Against this backdrop, some (including Arthur Hayes) predict considerable growth if that happens, with prices above $95,000.
On the other hand, it's also worth considering that if Trump backs down on his tariff standoff with China, some of the money currently in crypto could flow back into the stock market — the same with the commodities.