Why Bitcoin Falters as a Safe Haven While Gold Gains
Bitcoin dropped about 6.6% since Jan. 18 amid recent geopolitical jitters, while gold rose roughly 8.6% to new highs, highlighting a divergence in safe-haven behaviour. NYDIG’s Global Head of Research Greg Cipolaro argues bitcoin acts more like an “ATM” during short-term market stress: its high liquidity and 24/7 trading make it easy to sell to raise cash, so leveraged positions and vintage coins flow to exchanges, creating a supply overhang. By contrast, gold benefits from record central-bank buying and functions as a liquidity sink, making it the preferred hedge for episodic shocks such as tariff threats, war risk and sudden confidence losses. Cipolaro suggests bitcoin is better suited to hedge long-term monetary and geopolitical decay (fiat debasement, slow trust erosion) that unfolds over years, not weeks. Key takeaways for traders: expect higher near-term volatility and potential selling pressure in BTC during abrupt risk-off events; monitor on-chain flows of older coins and exchange inflows as sell signals; watch gold and institutional flows for cross-asset allocation shifts that could delay capital rotation into crypto.
Bearish
The article highlights factors that increase near-term downside risk for BTC. During episodic geopolitical or policy shocks, bitcoin’s liquidity and round-the-clock trading encourage rapid selling to raise cash, while on-chain data shows older coins moving to exchanges—both signal supply pressure. Historical parallels include crypto sell-offs during acute risk-off episodes (e.g., March 2020 COVID crash, various macro sell-offs) where BTC fell sharply as leveraged positions were unwound. Gold’s concurrent central-bank accumulation and role as a liquidity sink divert immediate safe-haven flows away from crypto, reducing demand support. Short-term impact: elevated volatility and potential further downside in BTC during sudden shocks; increased correlation with risk assets as traders liquidate. Long-term impact: neutral-to-positive for bitcoin’s narrative as a long-duration hedge, since its value proposition suits slow-moving monetary risks; however, that does not negate short-term bearish pressure when markets view current risks as episodic. Traders should watch exchange inflows, leverage metrics, and institutional gold buying as indicators; risk management (reducing leverage, wider stops) is advised in the near term.