Gold outperforms Bitcoin as a store of value as BTC price falls below $40,000

Earlier in the weekend, Bitcoin gave up double-digit gains from the start of the week and fell below the key psychological $40,000 mark. Santitment data shows that Bitcoin and gold are vying for the top spot as a store of value amid ongoing global uncertainty.

https://twitter.com/santimentfeed/status/1499888563139137536?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow noopener
“By the end of the week, Bitcoin fell back to $38,900 and SP500 followed suit. Their correlation still relates to when BTC might break out again. Meanwhile, gold rose to the same levels as when the war news broke.”

Looking at the charts, it’s clear that both Bitcoin and the S&P fell as the likelihood of war increased, while gold gained nearly 4%.

BTC, SPX and Gold Price Chart | Source: mood

Bitcoin and Gold in 2022

At the moment when Russia invaded Ukraine, the price of gold rose to its highest price since August 2020. On the contrary, although Michael Saylor – CEO of MicroStrategy accept dominant store of value, BTC is down 14% on the day.

Gold’s dizzying rise and Bitcoin’s fall on February 24th isn’t the whole story, however. Gold gave up gains almost immediately and Bitcoin rallied more than 17% as Ukraine announced it would accept Bitcoin and ETH donations. Cryptocurrency donations to Ukraine are immediately liquidated for fiat trading as the government does not accumulate cryptos. They sell as soon as they receive it in their wallet. Accordingly, the need to finance war creates selling pressure in the market.

So the rollercoaster continues this weekend. Gold overtook Bitcoin yesterday as the price rallied back to a local high of $1,974. While gold is only 5% below ATH, a level likely to be a tough resistance, bitcoin is trading closer to the historical support levels at $37,700 and $35,254. It will be interesting to see what happens next, but which of these really influences the argument that Bitcoin is the most important store of value?

Bitcoin price chart | Source: trading view

Which store of value is superior?

The controversy between gold and bitcoin over their role as a store of value has been a popular topic for many years. Although Bitcoin’s growth potential clearly demonstrates its ability to outperform gold, the king of crypto has yet to prove itself as a de facto store of value during turbulent times.

peter ship comment yesterday:

“Bitcoin is too risky to be used as a safe haven or store of value. Bitcoin fails its first major test. I don’t think it will get a second chance.”

It is the wrong approach to look at microeconomic events on individual days in order to make statements about long-term store of value. We need to zoom out on the charts and see how fast the blockchain space is growing. Many expect the global market to reach $67 billion in just 4 years, which is a compound annual growth rate of 68.4%. Additionally, bitcoins can be sent to family, friends, and charity from anywhere in the world.

While gold has been a global store of value for millennia, owners cannot transfer it to their families via cell phones. Conversely, you can transfer the value of bitcoins to your loved ones in minutes.

This opens the debate on what constitutes a store of value in 2022. If the store of value can protect us from the daily volatility of the market, the chart above shows that neither gold nor bitcoin passed the test. On the other hand, if a store of value is something that can hold or increase its value long enough, Bitcoin doesn’t seem to have failed completely this time.

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