Gold Looks Better than Bitcoin (BTC) and Everything Else During Geopolitical Tensions

The battle between Gold and Bitcoin for the best inflation hedge rages on. It has become even more prominent in light of Russia’s recent invasion of Ukraine, which has seen citizens from both countries rush to various assets in order to protect their wealth in these uncertain times. In the midst of all of this, some assets have proven to be the better option in these trying times.

Bitcoin is Pushed Out of the Race by Gold

Bitcoin has consistently outperformed gold in terms of margins over the last few years. As a result, the digital asset quickly surpassed the physical asset as the preferred method of hedging against inflation. Its ease of use and rapidly rising popularity provided a stronger argument than older gold’s waning popularity. However, only one of these assets stood up to the test during times of great turmoil.

When news of Russia’s invasion of Ukraine first broke last week, it sent a shock wave through all financial markets. Bitcoin and other digital assets were no exception, plummeting in the aftermath of the news. However, gold, which has proven its worth over hundreds of years, had provided the safe haven that investors required at this time.

While all other assets and indexes were collapsing, gold was soaring. It was the polar opposite of what the other assets were doing, gaining as much as they were losing. Gold was the clear winner on that single day.

During this time, bitcoin’s volatility was on display as the digital asset experienced the worst of it. When compared to other assets and indexes, the price of bitcoin had dropped the most. During this time, gold demonstrated some of the most pronounced tendencies to behave as a safe haven asset for investors. Its impressive rally on Thursday is proof of this.

The following day, Friday, all assets and indexes experienced a sharp recovery. This time, bitcoin took the lead as the day’s gains piled up. Gold had then recorded a downtrend, effectively wiping out all of its previous day’s gains.

Nonetheless, gold remains the asset of choice for long-term value storage. Russia had been amassing vast amounts of gold over the previous decade and a half. During this time, the country’s reserves increased from 450 to 2,200 tonnes. According to Arcane Research, this makes the asset’s short and long-term performance potentially interesting as governments impose sanctions on Russia.

As bitcoin and other indexes have recovered, gold’s claim to be the safe-haven asset has faded. As of Tuesday, Bitcoin, the S&P 500, and the UK 100 were all trading higher than the asset.