Data from global multi-asset investment platform eToro shows retail investors are opening more gold and bitcoin positions on news announcements of an escalating US/China trade war. Investors typically pile into gold as a natural hedge against macro economic unrest and data shows a correlation between the number of gold and bitcoin positions on its platform. This could suggest more retail investors are starting to view bitcoin as a store of value.
Simon Peters, eToro UK analyst commented: “Gold has long been considered the go-to ‘safe haven’ asset in periods of economic or political instability. This is because there is a limited supply, it has utility and its value is not impacted by central banks’ interest rate decisions.
“Bitcoin by comparison shares similar characteristics to gold in that there will only ever be a finite amount in existence (21 million), it’s decentralised, its price is not affected by inflation and it has the added benefit over gold of lower storage costs. Bitcoin requires vault-like storage to protect it from thieves, but it only ever takes up data. Therefore, it is unsurprising that bitcoin is commonly referred to as “digital gold”.
“Because the two share so many similarities and benefits, it’s not too surprising that a growing number of investors are betting on bitcoin as a safeguard. As the US/China trade war has escalated and more announcements of tariffs from both countries are made, we are seeing a greater number of positions being opened in both bitcoin and gold on eToro by retail investors.
“Of course, considering bitcoin as a safe-haven asset might not be an easy thing to do. Extreme price volatility, hacks and allegations of price manipulation still weigh on its reputation, however the correlation with gold on eToro’s platform could be a sign that the overall perception of bitcoin is gradually shifting from speculative towards a lower-risk store of value.”