Bitcoin challenges gold in uncertain times

Bitcoin has, in several periods, shown a tendency to recover after times of geopolitical and macroeconomic uncertainty. The development in March, when Bitcoin rose while gold fell, has renewed the question of how the asset behaves in turbulent markets. At the same time, patterns vary across different periods.

In March, Bitcoin increased by approximately 2 percent in USD, while gold declined by about 10 percent. The period was characterized by heightened uncertainty linked to macroeconomics and geopolitics, making the development particularly interesting from a historical perspective.

An analysis from Mercado Bitcoin, a crypto asset marketplace, shows that Bitcoin in several cases has experienced strong performance following periods of global uncertainty. This is especially true in situations where the market initially reacted negatively, but Bitcoin subsequently recovered relatively quickly.

Example: recovery after the COVID crash

A clear example is March 2020, when global markets fell sharply in connection with the outbreak of COVID-19. Bitcoin lost more than 40 percent in a short period as investors reduced risk in their portfolios.

Following the decline, however, a rapid recovery took place. Within just a few months, Bitcoin had regained a large portion of its losses, and the upward trend continued throughout the rest of the year. The recovery coincided with extensive central bank stimulus and increased liquidity in the financial system.

Bitcoin does not always function as a classic “safe haven” during the uncertainty phase itself. In some cases, the asset has initially been negatively affected alongside other riskier assets.

However, the recovery phase in several periods has been characterized by stronger performance for Bitcoin, which may reflect changes in risk appetite, liquidity, and macroeconomic expectations.

Comparison with gold

Gold has historically played a different role and has often been seen as a more stable hedge during ongoing uncertainty. That Bitcoin outperformed gold in March shows that the relationship between the assets can vary depending on market conditions.

At the same time, a single month does not necessarily indicate a shift in how these assets function over time. Both Bitcoin and gold are influenced by multiple factors, and their respective roles may change depending on the economic environment.

Historically, Bitcoin has in several cases demonstrated an ability to recover after periods of uncertainty, although the performance is not consistent. The example of the COVID crash illustrates how quickly market dynamics can change, while the development in March shows that the relationship between different assets continues to evolve.

Exposure through exchange-traded products

Investors have the option to invest securely in crypto assets via fully backed ETP:s through the Swedish company Virtune, whose products are listed on among others Xetra and Nasdaq Stockholm. These can be traded via several of the biggest traditional brokers.

Crypto investments are associated with high risk. Virtune does not provide investment advice. Investments are made at your own risk. Securities may increase or decrease in value, and there is no guarantee that you will recover your invested capital. Please read the prospectus, KID, terms at www.virtune.com.