Bitcoin’s strong performance in 2024 has been overshadowed as heightened geopolitical risks and the return of Donald Trump’s rhetoric push investors toward safer assets. Despite posting a modest 3% gain year-to-date, Bitcoin lags behind gold, which has surged 9% over the same period. Gold hit a record high of $2,882 an ounce after Trump’s controversial comments on February 4 about the potential US takeover of Gaza — remarks his aides later sought to clarify.
Bitcoin, often touted as a store of value due to its fixed supply cap of 21 million coins, has struggled to fully live up to that characterization. While gold continues to serve as a safe haven during economic instability — bolstered by tensions such as the US-China trade war and the threat of tariffs — Bitcoin has shown a closer correlation to technology stocks than traditional safe-haven assets.
Despite Bitcoin’s potential as a hedge against fiat currencies, its appeal has been diminished in a market where the US dollar remains highly sought after. Aoifinn Devitt, senior investment advisor at Moneta Group LLC, explained in an interview, “In time, Bitcoin will likely develop its own characteristics, but right now, it behaves like the riskiest of risk-on assets.”
However, Bitcoin advocates remain hopeful that the cryptocurrency’s intrinsic qualities will eventually allow it to function as a true store of value. The introduction of exchange-traded funds (ETFs) that invest directly in Bitcoin is expected to reduce its volatility, potentially shifting investor interest toward more stable assets. Paul Howard, Senior Director at market maker Wincent, predicts this will “gradually decrease volatility and likely encourage investors to seek out riskier cryptocurrency options.”
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