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Following an exceptional performance against various asset classes in 2024, Bitcoin is currently experiencing pressure from multiple factors, including a heightened demand for safe-haven investments triggered by Donald Trump's return to the White House and escalating international unrest.
According to Bloomberg, Bitcoin's annual climb of slightly more than 3% ranks behind gold'slustre 9% rise.
Gold resumed its uphill climb as renewed trade jitters added lustre to the safe-haven metal.
During periods of economic and political instability, many people choose to invest in gold because of its perceived safety.
The precious metal reached a record high of $2,882 per ounce after President Trump's February 4 speech regarding the potential US seizure of Gaza, a comment his advisors sought to mitigate.
On Friday, the price of gold rose, marking its sixth consecutive week of increases as investors turned to the safe-haven asset amid escalating trade concerns between the US and China.
The gold market also appears to have been supported by the ongoing increase in the People's Bank of China's gold reserves and a new initiative for insurance funds to invest in gold.
Broader geopolitical risks are also expected to keep gold buoyed.
FX Street's technical analyis shows, should bullion/dollar exceed $2,830, the subsequent barrier will be the 100% Fibonacci level approximately around $2,844, corresponding to the upward movement from January 25 to January 31.
Upon surpassing this level, the subsequent resistance will be the 161.8% Fibonacci extension at $2,889, followed by $2,900.
If sellers surpass the 50-period Simple Moving Average (SMA) at $2,770, the subsequent target will be the January 27 swing low of $2,730. The subsequent stop beneath that would be $2,700.
On the other hand, Bitcoin is currently trading at a nearly 10% discount relative to its all-time high.
The intrinsic scarcity of Bitcoin, with a supply cap of 21 million coins, has led to comparisons to gold as a store of value.
However, this expectation has not been met by the cryptocurrency.
Recent developments, such as the US-China trade war and the possible implementation of tariffs, have intensified the enduring appeal of gold in the face of economic uncertainty.
Conversely, the value of Bitcoin has frequently correlated closely with tech stocks, which have experienced significant declines.
The correlation of Bitcoin and the tech-heavy Nasdaq index has risen in recent months.
Although Bitcoin may be seen as a way to protect oneself from the volatility of fiat currencies, its market appeal is limited as long as the US dollar is highly sought after.
This has been the case since Trump's election win.
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At the moment, Bitcoin is acting as the most risky asset, but in due time, the OG token is expected to develop its own unique traits that make it independent of markets.
Crypto enthusiasts, however, hope that Bitcoin will eventually act more like a store of wealth due to its inherent properties.
Investors seeking volatility will likely shift to riskier cryptocurrency assets once ETFs that invest directly in the biggest digital assets become more widely adopted, which will gradually decrease the volatility in the token.
Despite the impact of a stronger dollar on gold prices, the yellow metal has gained prominence in recent weeks due to increased global economic risks.
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