Gold Is No Longer a “Safe Zone” Against Cryptocurrencies

On Tuesday morning, the price of gold rose 1%. The reason for this increase was evaluated as the missile launched by North Korea the other day. The geopolitical position worried the market.

But according to Bloomberg, this increase in the price of gold was a belated and minimal response to events. Gold is no longer a safe haven against cryptocurrencies. Looking at the traditional models, the price of gold should have been higher than its current price. There are two reasons for this relatively low performance of gold.

Depreciating Gold

One of the reasons why gold’s performance is not the same as before is that investors are no longer investing in gold but in cryptocurrencies. Despite the recent high inflation in Venezuela, virtual currencies such as Bitcoin continued to hold their value.

The unconventional monetary policies of the central banks also led to the depreciation of gold. At the same time, the problems of central banks with their balance sheets also annoy investors. Some investors are now looking for the safe haven in Bitcoin.

Investors have fled from precious metals and the stock market, looking at the returns and overall stability of Bitcoin and other cryptocurrencies. In the past 10 weeks, more than 30 billion dollars of stocks have been withdrawn from the market and other investment options have been evaluated.

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