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Bitcoin maximalists like Strategy’s Michael Saylor often tout the cryptocurrency as a form of digital gold, a safe haven asset that can protect holders from financial storms.
Donald Trump’s White House has echoed the argument that Bitcoin’s scarcity makes it ideal as a store of value.
That narrative has now been challenged — again — after the digital asset’s price nosedived alongside tech stocks like Meta, Nvidia, and Elon Musk’s Tesla. By contrast, gold has surged to record heights.
In short, Bitcoin is behaving less like digital gold and more like a glorified tech stock, market watchers say.
“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. “Most of crypto equals tech play [in my opinion]. So it currently is and will be caught up in a broader tech sell-off.”
Tariffs trigger tumble
The debate about Bitcoin’s role as a safe haven asset comes as it shed 15% of its value over the past month.
It now trades at roughly $82,000. Some experts even suggest it will plunge as low as its previous March 2024 high of $74,000.
The overall crypto market’s value dropped 18% and the tech-heavy Nasdaq has dropped 11% in the same period.
Trump triggered the plunge after instating, retracting, then reinstating, re-retracting, and re-reinstating tariffs against the US’ closest trading partners Mexico and Canada.
The back and forth prompted Canadian Foreign Minister Mélanie Joly to describe US trade policy as a “psychodrama.”
Failed as a safe haven?
This is not the first time Bitcoin has failed to live up to its reputation as a safe haven. During the March 2020 Covid-induced crash, the asset plunged more than 50% in a two-day period.
Still, the digital gold narrative has picked up speed of late.
The White House referred to Bitcoin’s safe haven potential in Trump’s executive order to create a national stockpile of the asset.
“Because there is a fixed supply of BTC ($80,698.87), there is a strategic advantage to being among the first nations to create a strategic Bitcoin reserve,” it said.
The argument is that the country will be able to hedge against financial instability by storing up the cryptocurrency. It holds gold and petroleum for the same reason.
Antsy supporters
Other top officials, like Federal Reserve Chair Jerome Powell hum a similar tune.
In December, Powell said, “it’s just like gold, only digital.”
Industry heavyweights like BlackRock CEO Larry Fink, and Euro Pacific chief economist Peter Schiff have echoed that sentiment over the years.
Others adopt a more measured approach.
In May, Bloomberg Intelligence analyst Eric Balchunas described Bitcoin as investment hot sauce, something to add to a traditional portfolio made out of stocks and bonds.
What made it interesting to him, compared with other spicy alternatives, “is this underlying story about hedging the devaluation of the dollar.”
“To me, Bitcoin is like gold, but as a teenager,” Balchunas told The Block.
However, its recent price action says otherwise — and supporters are getting antsy.
“Can’t act like a high beta asset with every sell-off,” Geraci said.
Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at [email protected].
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