$BTC WHEN GOLD LOSES ITS SHINE, WILL BITCOIN TAKE OVER?
Bitcoin is moving away from its identity as a risk asset, behaving more like a hard asset in an economic environment where gold typically underperforms, according to analysts at Citi Research.
In a recent report, Citi analysts said Bitcoin has outperformed during periods of rising interest rates and long premiums, conditions that tend to weigh on gold.
Historically, gold performs best when long premiums and yields both fall, reducing the opportunity cost of holding non-yielding assets.
But Bitcoin’s strongest returns have come during the opposite situation, where real interest rates are rising and inflation concerns are heightened.
The findings suggest Bitcoin may be behaving more like commodities such as energy or base metals, which tend to rise during periods of economic overheat.
The asset’s limited supply and growing investor interest during periods of macro stress have contributed to this pattern.
Citi said Bitcoin typically trades in line with stocks during market downturns, but recent episodes, such as the collapse of Silicon Valley Bank and the bond market turmoil in late 2023, stand out.
In that case, Bitcoin posted gains even as broader risk assets struggled.
Gold tends to respond predictably to real yields. When interest rates fall, gold benefits as a store of value.
When interest rates rise, gold lags. Bitcoin, on the other hand, has outperformed its unconditional return profile when both the long premium and yields have risen, a pattern not seen in safe-haven assets.