Bitcoin price resurgence revives ‘digital gold’ comparisons.
Bitcoin’s recent price revival has once again bolstered the cryptocurrency’s reputation as a form of “digital gold” among some analysts, who argue it serves as a safe haven in times of geopolitical and economic crisis.
The world’s leading cryptocurrency has risen more than 10 percent in the past week, despite turmoil in the banking and technology sectors.
Bitcoin’s price trajectory actually mirrored gold’s during the collapse of Silicon Valley Bank (SVB) earlier this week, following a similar path to stocks.
Cryptoanalyst and author Glen Goodman said it was “fascinating to see bitcoin break out of its correlation with stocks … and instead align with gold.”
He added: “Has the narrative of ‘BTC is a store of value, its digital gold’ returned? Absolutely [the SVB collapse] has shaken faith in traditional banks.”
Nigel Green, chief executive of financial consultancy deVere Group, said long-term inflation of the US dollar and other fiat currencies could also see bitcoin’s function as a stable store of value – it has a fixed supply of 21 million coins – continue to be realized during the the coming years.
“Investors are looking for alternative currencies, such as cryptocurrencies,” he said. “Going forward, these will increasingly compete with traditional, fiat, and this will help trigger the waning dominance of currently leading international currencies.”
While those within the crypto industry blamed the banking problems on problems with centralized financial systems, others blamed the banks’ involvement with digital assets.
“As the impact of FTX’s collapse continues to ripple outward, today we see what can happen when a bank over-relies on a risky, volatile sector like cryptocurrencies,” said Senator Sherrod Brown, chairman of the Senate Banking Committee.
“As the bank of choice for crypto, Silvergate Bank’s failure is disappointing but predictable.”
Krypto-tall disputed this assessment and claimed that the bank’s collapse was a result of not having enough money to support depositors’ claims.
Marcus Sotiriou, a market analyst at listed digital asset broker GlobalBlock, said Silvergate’s demise was “not a crypto problem”, arguing that there was bias among some politicians against the traditional financial sector.
“There is a clear agenda, in my opinion, against all crypto companies from American politicians,” he said.
“We could well see companies that provide infrastructure for trading digital assets move offshore because of this attitude.”