Gold outperforming bitcoin as AI 'bubble' and geopolitical risks drive investors toward safe havens
Quick Take
- Investors are shifting to gold as AI-related tech stocks decline and geopolitical tensions rise, notes Outlier Ventures Head of Research Jasper De Maere.
- Gold nears an all-time high, significantly outperforming Bitcoin amid market uncertainty.
- Bitcoin struggles as a hedge, trading more like tech stocks than a safe asset.
The downturn in leading AI-related tech stocks like Nvidia, Google, and Microsoft, combined with rising geopolitical tensions, is prompting investors to seek safer assets, according to analysts. Specifically, capital appears to be favoring gold, which has been outperforming bitcoin since the broader market panic last Monday.
In the past 24 hours, gold prices have risen, with the spot price increasing by 0.6% to $2,468 per ounce and U.S. gold futures gaining 0.3% to $2,481.50. This brings gold close to its all-time high of $2,483.68 reached on July 17. Bitcoin, still down about 23% from its all-time high of around $73,000, has decreased by 4% over the past day and is trading around $58,468, according to The Block's Bitcoin Price Page.
Investors seeking capital safe havens
From a macroeconomic perspective, investors turn to stores of value in response to inflation, currency devaluation, economic instability, and rising geopolitical risks, said De Maere. He noted that bitcoin is a scarce asset, akin to gold, serving as both a store of value and a potential medium of exchange.
In contrast, ether and altcoins are more like speculative tech stocks. Some investors do not distinguish between these assets, treating all blockchain-based assets as one. "This is driven by factors like poor understanding of the underlying asset and regulatory uncertainty, investors often throw the baby out with the bathwater and just go long or short all digital assets at once," De Maere added.
"In theory, we should see a decoupling of the performance between both. However, the reality is that the 30-day correlation between bitcoin and ether still sits greater than 0.95," he said.
Bitcoin's trading closer to technology assets rather than gold is due to several factors, including the lack of regulatory clarity and the nascent crypto market environment. "Bitcoin still has some way to go before becoming a mainstream hedge like gold," said De Maere. "That said, I'm still convinced that bitcoin has the potential to get there in the medium to long term."
Bitcoin's reaction to wider market turmoil
Monday's market report from custodian company Copper on the recent market turmoil aligns with De Maere's take. "The correlation between bitcoin and major assets, except gold, has moved in tandem, indicating market stress and the impact of global macro shocks," Copper analysts said.
Amid the current volatility, De Maere remains optimistic about the broader cryptocurrency ecosystem, highlighting innovation on the Bitcoin baselayer and Outlier Ventures' continued commitment to developing this space.
"Mainly on institutional DeFi, we’re seeing Bitcoin as a viable blockchain to compete against other, often more mature ecosystems," De Maere said.
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