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The head of the economic department at 21Shares, Stephen Coltman, clarified the disparity in the price movements of Bitcoin and gold by highlighting differences in demand from central banks and private investors.
He stated that the increase in gold prices over the past three years has been largely driven by central banks, while Bitcoin remains an asset more commonly favored by private investors.
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“Currently, physical gold holds a more significant strategic role and is utilized by nations for storing reserves that are shielded from external pressures. Consequently, its price dynamics are becoming increasingly sensitive to deteriorating international relations,” Coltman remarked.
In his assessment, Bitcoin serves a different purpose and is more frequently employed during periods of banking system instability as an alternative financial tool.
He cited recent events in the Middle East, pointing to the vulnerability of traditional infrastructure. According to him, following the onset of conflict, communication channels in Dubai and Abu Dhabi were disrupted due to missile and drone strikes from Iran, underscoring the importance of having 24/7 access to financial instruments.
Coltman noted that the observed inverse correlation between Bitcoin and gold makes their combined use in investment portfolios sensible, as the assets serve distinct functions.
Previously, the investment firm Grayscale indicated that Bitcoin has lost its correlation with gold, and its short-term performance is now more influenced by the stocks of technology companies.
