With the recent drops, doubts arose about Bitcoin continuing to be digital gold, because while the metal appreciated, BTC fell. However, with its return above $70,000, expectations and fears seem to have diminished. Check it out!
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Bitcoin Returns to $70,000
Bitcoin has recently experienced a significant surge, finally surpassing $70,000. Last month it would approach $70,000 and then retreat, as if it lacked the strength to continue rising. That's why, even though it hasn't returned to $100,000, the more than 7% increase on March 4th served to revive expectations.
This price was the highest in the last 30 days and gives cryptocurrency investors a breather, as many were talking about the possibility of it continuing to fall, and even reaching $50, $40,000 or $30,000 per BTC unit. This drop showed that, so far, the bottom seems to be close to $60.
Is the “DIGITAL GOLD” Thesis Still True?
In a conversation on the All-In Podcast, Ray Dalio mentions a very interesting point about Bitcoin. In his analysis, he has noticed a strong relationship between Bitcoin and technology companies, such as those in the NASDAQ index, where BTC ends up following their highs and lows.
It's quite interesting because this relationship is indeed observed, and the reason this happens might be that, in the investors' view, Bitcoin is being analyzed as the Blockchain technology linked to it, which allows transactions to be stored immutably on the network nodes. Therefore, they might be seeing Bitcoin as equal to Blockchain; let's consider it as a technology, and that's not wrong, but they forget to also analyze the asset itself, which has a limit of 21 million units.
Bitcoin has been called by many the digital gold, but in recent months, during this period of global uncertainty, it has depreciated considerably, while gold has appreciated in all recent time periods. Could this idea of Bitcoin as an emergency reserve actually be the opposite? After the issuance of ETFs and their adoption by companies, its volatility and its relationship with technology companies seem to have increased significantly.
I believe many expected Bitcoin to offer some protection during these uncertain times, but its value has fallen, mirroring stocks. However, in countries experiencing significant currency devaluation due to problems, BTC ends up appreciating significantly compared to those countries' currencies.
But the question remains: wouldn't other assets also rise proportionally to their currencies? In other words, wouldn't geographical diversification solve a local problem? Bitcoin can solve this problem, and all a person would need is internet access. Furthermore, it possesses characteristics that make it "Digital Gold," such as immutability (in this case, the 21 million limit), the ability to verify authenticity, and much more.
