Analyst: Recent sharp drop in Bitcoin jeopardizes its "digital gold" status
The sharp decline in cryptocurrency is testing the axiom that Bitcoin is equivalent to "digital gold" in the industry. With the stock market plummeting on Monday and arbitrage trading collapsing, Bitcoin's performance is more like a stock than gold. Data shows that the correlation between Bitcoin and gold turned negative in July. eToro analyst Josh Gilbert said, "It is unrealistic to think that institutional investors allocate funds to Bitcoin for the same reasons as gold. The roles these two assets play in a portfolio are not the same." Some observers believe that Bitcoin's sharp drop supports the view that it is a category of asset particularly susceptible to potential risks (such as the Federal Reserve waiting too long to cut interest rates leading to an economic downturn). Gilbert said, "If investors panic or want to deleverage, cryptocurrencies are often the preferred asset."
Jinshi Data reported on August 6th that the sharp decline in cryptocurrency is testing the industry axiom that Bitcoin is equivalent to "digital gold". With the stock market plummeting on Monday and arbitrage trading collapsing, Bitcoin's performance is more like a stock than gold. Data shows that the correlation between Bitcoin and gold turned negative in July. eToro analyst Josh Gilbert said, "It is unrealistic to think that institutional investors allocate funds to Bitcoin for the same reasons as gold. The roles played by these two assets in a portfolio are not the same." Some observers believe that Bitcoin's sharp decline supports the view that it is a category of assets particularly susceptible to potential risks (such as the Federal Reserve waiting too long to cut interest rates leading to an economic downturn). Gilbert said, "If investors panic or want to deleverage, cryptocurrencies are often the preferred asset."