Bitcoin 
$91,081 has been behaving like a tech stock during global market fluctuations, setting new records while exhibiting unique volatility. This uncertainty leaves the story of digital gold unproven, though it clearly marks the emergence of a new asset class.
Is Bitcoin the Digital Gold?
In 2021, narratives emerged that Bitcoin could be a safe haven amid inflation due to its limited supply. Bitcoin performed robustly as inflation rose, even reaching new peaks. Yet, in 2022, as inflation control efforts were undertaken, Bitcoin did not deliver the expected performance, leading to criticisms of its effectiveness as an inflation hedge.
Nate Geraci, President of NovaDius Wealth Management, emphasized that Bitcoin is still in its infancy and needs time to prove itself as a store of value. Despite mixed results so far, the rapid recovery and new highs post-declines have caught many investors’ attention, according to Geraci.
Before addressing whether Bitcoin is digital gold, one must understand what gold represents. Comparing Bitcoin to gold is not entirely fair, as Bitcoin, still a “teenager” at 15-16 years old, exhibits variable performance, while gold has been a reliable store of value for thousands of years.
The Future of Cryptocurrencies
The strength of Bitcoin correlates to the robustness of the cryptocurrency ecosystem, which is inherently based on the Bitcoin story. Many cryptocurrencies are more about creating value with new technology rather than being stores of value. This distinction matters significantly. Despite declines and multi-billion dollar outflows from ETFs this year, there has been a net inflow of $22 billion since January, rendering outflows less significant.
The leverage effect in cryptocurrency markets, noted by BlackRock’s CEO, plays a crucial role. While it yields impressive results during upswings, it also fuels downward momentum.
Geraci predicts that most cryptocurrencies will continue to behave like tech stocks, while Bitcoin will become an exception in the crypto market.
“Putting Bitcoin aside, I view most other crypto tokens as risky assets – more closely aligned with high-growth tech stocks than store of value instruments. Their growth relates to the future of stablecoins, tokenization, and decentralized finance.”
