Bitcoin News Today: Gold Outperforms Bitcoin in Bear Markets, Challenges Crypto as Inflation Hedge

Bloomberg Intelligence’s Athanasios Psarofagis has highlighted gold’s superior performance during bear markets compared to Bitcoin, challenging the perception of the cryptocurrency as a reliable inflation hedge [1]. In a recent appearance on Bloomberg TV’s “ETF IQ,” Psarofagis observed that gold tends to maintain its value during S&P 500 sell-offs, while Bitcoin often depreciates in tandem with equities. This contrast underscores the different roles the two assets play in investor portfolios.

According to Psarofagis, while Bitcoin can deliver explosive returns in rising markets, its resilience under pressure is questionable [1]. “Bitcoin has the kind of explosive returns that gold can’t match when markets are strong,” he said. However, when sentiment turns negative, gold demonstrates more stability and resilience. The analyst also noted that the narrative of Bitcoin as a hedge against inflation or broader market downturns may be overstated. Instead, he argued, Bitcoin functions more as a hedge against the expansion of the global money supply [1].

Despite its drawbacks, gold is not a perfect defensive asset. Psarofagis emphasized that both gold and Bitcoin come with volatility, though Bitcoin is the riskier of the two. Its status as a currency, store of value, or speculative tool remains debated, adding to its unpredictability [1]. One of Bitcoin’s advantages, however, is its fixed supply of 21 million coins, which provides a level of scarcity that governments cannot manipulate [1]. This feature has contributed to its value in bullish markets.

Yet, during major equity downturns—especially those impacting technology stocks—Bitcoin has struggled to consistently protect investor capital [1]. This suggests that while Bitcoin may offer substantial upside potential, it may not serve as a reliable refuge during market stress.

The analysis underscores the importance of understanding the distinct risk-return profiles of gold and Bitcoin. Investors seeking stable value during market declines may find gold more dependable, while those willing to take on higher risk for higher reward may find Bitcoin appealing in rising markets.

[1] Source: [1] Gold Beats Bitcoin in Bear Markets, Analyst Claims (https://coinmarketcap.com/community/articles/689af5813962772b13d6617c/)