Bitcoin takes its place: Since the emergence of Bitcoin, gold has gradually lost its monetary status. Gold reached its historical peak in 2011, and today, 12 years have passed, and its price is still lower than the highest price in 2011. In these 12 years, there has been no increase, while Bitcoin has become the best performing asset in history during the same period.
Bitcoin vs. Gold: One of the best ways to demonstrate Bitcoin’s superiority over gold and the currency decoupling effect is to look at gold priced in Bitcoin. The comparison is very enlightening.
Gold’s Transformation: In the past, gold was synonymous with a safe-haven asset. If the world was unstable, capital would flow into gold. If banks seemed to be in trouble, large amounts of capital would flow into gold. This is changing. Today, in times of turmoil, Bitcoin is more of a safe-haven asset, while gold is more of a risky asset.
Bitcoin's Strong Performance: With the rapid rise in 10-year Treasury yields, it has revealed the long-term maturity risk faced by many banks. We have seen a sneak peek at what could happen to the banks in this environment at the beginning of this year, and I would be surprised if we don't see the collapse of the US banks, version 2.0, soon. Historically, gold usually senses this early, but now it is weak. This can be seen again in Chart 3. At this moment, gold should have risen, indicating the emergence of problems, it should have warned us in advance that problems in the US financial system were about to explode. However, instead, Bitcoin is strengthening itself.
Bitcoin takes over the role of gold: No matter how you look at it, I think Bitcoin has taken over the role that gold has long played. It is no longer the safe haven that can be sought in uncertain times, it is no longer the preferred low-risk asset. This role seems to have passed to Bitcoin, and this trend is getting stronger.
Conclusion: While the strength of the US dollar usually has a negative impact on the price of gold, the same does not hold true for Bitcoin. Bitcoin has held up despite the strength of the DXY (Dollar Index). No matter how you look at it, I think Bitcoin has assumed the role that gold once faithfully played. Gold is no longer a safe haven, and Bitcoin is more qualified for this role and is becoming more prominent. This trend is likely to continue to strengthen over time, allowing us to witness a transformation in the financial world.
