Bitcoin is outperforming gold amid heightened uncertainty in the global markets.
The world's most valuable cryptocurrency is currently trading at $11,700, representing 16 percent gains on a month-to-date basis. Meanwhile, gold, the traditional safe-haven asset, has added 6 percent this month.
The precious metal picked up a bid at $1,400 on Aug. 1 as the U.S. President Trump's decision to escalate trade tensions with China triggered a flight to safety. The S&P 500, a global benchmark for riskier assets, fell 0.90 percent on the same day.
The risk aversion worsened earlier this week when China began allowing the Yuan to depreciate beyond the major psychological level of 7 per U.S. Dollar.
As a result, the S&P 500 fell to a two-month low of $2,822 on Monday and gold extended gains to hit a fresh 2019 high of $1,510 yesterday. Interestingly, bitcoin also found takers near $9,900 on Aug. 1 and rose to a one-month high of $12,325 on Tuesday.
Bitcoin rising along with gold during times of stress in the global markets indicates the top cryptocurrency is being accepted as a new safe haven, according to CNBC Host Ran NeuNer.
Further, the recent rise in the leading cryptocurrency coincided with a sharp uptick in the S&P VIX index – Wall Street's fear gauge, as seen in the chart below.
Bitcoin does seem to have found some love as a safe haven if recent price action is anything to go by.
However, there is no long-run correlation between bitcoin, stocks and the US Dollar, as noted by prominent analyst Mati Greenspan.
In fact, gold and bitcoin have moved in opposite directions in the past.
For instance, BTC dived below the long-held support of $6,000 on Nov, 14, reviving the bear market which had come to a halt near that psychological support in five months to October. By mid-December, BTC was changing hands at 15-month lows near $3,100.
During the same time frame, gold went from $1,200 to $1,300 and further extended the rally to $1,346 (Feb. 20 high). Further, BTC remained in a bear market throughout 2018 despite the trade tensions between the US and China.
All-in-all, it is still too early to say that bitcoin has taken up the role of a safe-haven asset.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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