Is Bitcoin a digital gold?

Backers like Strategy’s Michael Saylor, BlackRock’s Larry Fink and even US President Donald Trump have made the case that its scarcity makes Bitcoin an ideal storage of value.

That narrative has been challenged after Bitcoin fell to almost 19% from its all-time high of $108,786, reached on the day of Trump’s inauguration on January 20.

Now, Standard Chartered’s top crypto analyst says Bitcoin isn’t a safe haven asset — at least not yet.

“Bitcoin is almost always more correlated to the Nasdaq than to gold,” wrote Geoff Kendrick, Standard Chartered’s global head of digital assets research, in a Monday note.

The Trump effect

Trump triggered the plunge in stock and crypto markets by floating, then retracting, then floating again, tariffs against countries including Mexico and Canada.

The Nasdaq 100 is down almost 7% since Trump’s inauguration. The crypto market in total is down almost 20%. Gold, meanwhile, is hitting new records this month.

So the cryptocurrency hasn’t exactly lived up to the digital gold theory.

Still, Kendrick argues that investors can eventually use Bitcoin as a hedge against problems in the sphere of traditional finance.

He gave the collapse of Silicon Valley Bank as an example of such a risk.

“These hedges generally serve different purposes to buying gold, which hedges against geopolitical and long-term inflation concerns,” Kendrick wrote.

Kendrick compared Bitcoin’s performance since December 2017 to the so-called Magnificent Seven — megacap technology stocks like Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.

He argued that if Bitcoin had taken Tesla’s spot among the Magnificent Seven, the alternative group would’ve outperformed the real group five out of the seven past years.

Act like it

It’s not the first time Bitcoin has faced criticism for wild swings that mimic riskier assets.

Market watchers say of all times, now should be Bitcoin’s moment to live up to the hype.

“If Bitcoin equals ‘digital gold,’ then time to act like it. Otherwise, it will reinforce the narrative that it’s simply a high beta asset,” said ETF Store President Nate Geraci on X March 9.

And during the March 2020 Covid-induced crash, the asset plunged more than 50% in a two-day period.

Instead, Bitcoin has behaved more like a tech stock, Geraci and others noted.

Some say that Bitcoin still has time to grow into its role as a haven asset.

“To me, Bitcoin is like gold, but as a teenager,” Bloomberg Intelligence analyst Eric Balchunas told The Block in May 2024.

Andrew Flanagan is a markets correspondent for DL News. Have a tip? Reach out to aflanagan@dlnews.com.