Is Bitcoin’s digital gold status an ‘utter failure’?

Following Bitcoin’s (BTC) crash in the wake of growing conflict between Israel and Iran, questions have emerged regarding the asset’s ability to emulate gold and serve as a hedge in an environment dominated by geopolitical disputes.

In this light, a prominent analyst in the precious metals sector has suggested that after Bitcoin’s latest price movement, the asset’s promise to serve as “digital gold” has become a disappointment, Peter Spina said in an X post on October 2.

Spina shared data comparing Bitcoin to gold over the last several years to support this assessment, highlighting a notable disparity in performance.

While Bitcoin surged during the cryptocurrency bull run of 2021, it has since seen a dramatic decline. The data indicated that the Bitcoin-to-gold ratio peaked at 37.53 in 2021, only dropping around 22.60—42% off its peak. Meanwhile, gold has maintained steady growth, rising to above $2,600 per ounce as of October 2024.

“Yesterday was another demonstration that the “digital gold” narrative for #Bitcoin is an utter failure,” Spina said.

Based on this metric, Spina suggested that the current conditions present an “excellent window” for investors to return to physical gold and silver before mainstream investors realize they are holding “gambling tokens.”

Bitcoin’s momentum to $70,000 fades

It is worth noting that before Bitcoin’s drop, the digital asset was poised to push further and claim the $70,000 mark in search of a new all-time high. Indeed, the price movement went against the market’s general outlook, where expectations were high that Bitcoin would rally in tandem with the historical ‘Uptober’ phenomenon, where the asset typically turns green in October.

As things stand, crypto analysts such as Bitcoinsensus believe that Bitcoin, which is trading at $61,104 as of press time with daily losses of 4%, is likely to correct further. The expert noted that Bitcoin’s loss of momentum to reclaim the 0.618 Fibonacci level around $65,000 is a warning sign of possible further drop.

It’s worth noting that Bitcoin proponents maintain the asset has the potential to rival gold, citing its infancy compared to the metal. They consider developments such as the rollout of Bitcoin spot exchange-traded funds (ETF) as one of the key foundations for attaining ‘digital gold’ status.

Gold’s outlook

At the same time, following Bitcoin’s inability to make new highs in recent months, economist Peter Schiff also questioned the rationale behind investing in the cryptocurrency for the long term.

“Another day, another record high for the price of gold, which is now trading above $2,614. In contrast, Bitcoin hasn’t made a new high since March, and against gold, it hasn’t made a new high since Nov. 2021. How long does this trend have to last before HODLers admit defeat?” Schiff posed.

In the build-up to the conflict between Israel and Iran, gold has been surging higher, hitting a new all-time high above $2,600, as some market players anticipate a possible push towards $3,000. Although the metal recorded a minor correction on October 1, analysts at Gold Predictors believe there is room for continued growth.

For instance, in an X post on October 2, the analyst noted that gold’s price action highlighted a lack of top formation, reinforcing expectations for further gains.

Notably, several bullish forces have supported the metal’s price since the March rally, and recent consolidation phases have only added strength to the uptrend. With prices trading above previous consolidation zones, the continuation of this rally seems probable.

Despite the possibility of continued growth, Finbold reported that analysts are sounding cautious. They note that gold will likely correct in the coming days based on technical outlooks and its correlation with the United States presidential election.

With the current momentum dubbed historical, other players suggested that the metal might be warning the market of a possible black swan event.

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