While Bitcoin has been struggling to recover for months, precious metals are experiencing one of their strongest growth periods in recent years. On Wednesday, gold rose 4.4% in just 24 hours, adding roughly $1.5 trillion to its market capitalization. That’s an amount almost equal to Bitcoin’s total capitalization, which is around $1.75 trillion.
The price of gold broke through the $5,500 per troy ounce mark and reached a new all-time high. The total value of the gold market has thus risen to approximately $34 trillion, according to data from Infinite Market Cap.
Investors’ appetite for growth is not limited to gold. Silver is also strengthening significantly, having appreciated by 21.5% over the past week, with its market capitalization climbing to $6.6 trillion. Silver has thus further increased its lead over Nvidia, which is currently the most valuable publicly traded company in the world.
The several months of growth in precious metals is often described as a “debasement trade” — that is, investors’ response to concerns about fiscal irresponsibility and currency devaluation as a result of monetary expansion. It is precisely in such periods that assets considered to be stores of value traditionally shine.
And while gold fulfills this role, bitcoin—despite often being referred to as “digital gold”—has been treading water in recent months.
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Bitcoin seeks direction after October crash
The price of Bitcoin has not risen significantly since early October, when the cryptocurrency market was hit by a sharp crash. This resulted in the liquidation of positions worth over $19 billion. Just before this crash, investors were increasingly convinced that Bitcoin and gold would work together as a hedge against currency devaluation in an environment of rising debt and loose monetary policy. However, the reality of recent months shows a different dynamic for the two assets.
The difference is even more apparent when looking at a longer time horizon. Over the past five years, gold has appreciated by 185.3%, while Bitcoin has appreciated by “only” 164%. In a historical context, this is not a bad performance for a cryptocurrency—but for the first time in a long time, a traditional safe-haven asset is outperforming its digital competitor.
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Institutions: Bitcoin is undervalued
Despite Bitcoin’s lackluster performance, some investors remain convinced that current prices do not reflect its true potential. According to a Coinbase survey published this week, 71% of the 75 institutional investors surveyed consider Bitcoin to be undervalued in the $85,000 to $95,000 range.
At the same time, roughly 80% of these investors said that if the market fell another 10%, they would either hold or even increase their cryptocurrency positions. This suggests a long-term belief in cryptocurrencies as an asset class, despite short-term fluctuations.
The different perceptions of Bitcoin and gold are also reflected in investor sentiment indices. The Crypto Fear & Greed Index, which measures sentiment in the cryptocurrency market, currently stands at 26 out of 100 – in the “fear” zone. In contrast, JM Bullion’s gold index stands at 99 out of 100, which corresponds to the “extreme greed” zone.
The market is thus sending a clear signal today – while gold is the clear winner of the era of uncertainty in the eyes of investors, Bitcoin is still looking for a way to convincingly fulfill its role as a digital safe haven again.
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