The recent cryptocurrency selloff has not deterred pro-crypto enthusiasts from their bullish beliefs, with one expert even claiming that Bitcoin has historically outperformed gold during periods of excessive debt and leverage expansion in the financial system. Despite the selloff, the long-held belief that Bitcoin serves as “digital gold” and should be part of one’s portfolio to protect against stock market volatility is being put to the test.
Lawrence Lepard, an Investment Manager at Equity Management Associates, shared his insights on the current financial landscape in a podcast with Natalie Brunell. Lepard believes that Bitcoin will benefit more from the expansion of leverage and money supply growth in the financial system compared to gold. He pointed out that during the period of 2019 and 2020, when Bitcoin was trading between $5,000 and $10,000, gold remained stagnant around $1,365. Lepard predicts that Bitcoin could hit $100,000 by 2024, emphasizing its potential to outperform gold.
However, the recent cryptocurrency market retreat, which saw Bitcoin fall below $63,000, has raised concerns about the role of Bitcoin as a safe haven asset. Geopolitical tensions, particularly in the Middle East, have added to the uncertainty surrounding risk assets like cryptocurrencies. Gold and oil prices surged amid the tensions, with gold reaching close to an all-time high and crude oil prices rising significantly.
Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, noted a shift from Bitcoin to gold among investors, reflecting the current correction in Bitcoin’s price. Rising tensions between Iran and Israel have fueled this movement towards traditional safe havens like gold. The geopolitical uncertainty has led investors to seek stability in assets like gold, despite Bitcoin being dubbed as “digital gold.”
As fears of a world recession rise, investors are turning to more established safe havens like gold, putting pressure on cryptocurrencies. The ongoing economic uncertainty and geopolitical turmoil could further impact the cryptocurrency market, highlighting the importance of diversifying portfolios with assets like gold.
