Bitcoin or Gold: What's the real safe haven during global crises?
As geopolitical tensions between Iran and Israel flare up, investors are turning to traditional safe-haven assets to shield their portfolios. At the centre of this flight to safety are two competing assets: gold, the age-old hedge, and Bitcoin, often dubbed 'digital gold.'
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Safe haven or speculative asset?
As geopolitical tensions between Iran and Israel flare up, investors are turning to traditional safe-haven assets to shield their portfolios. At the centre of this flight to safety are two competing assets: gold , the age-old hedge, and Bitcoin , often dubbed 'digital gold.' But recent market behaviour raises a question—can Bitcoin truly rival gold in times of global stress?Gold prices have surged since tensions erupted, hitting record highs. On June 12, gold was priced at Rs 96,700 and touched Rs 1,01,078 by June 16. Although there was some profit booking later—with prices retreating to Rs 99,452 by June 18—the rally underscored investor preference for the tangible metal amid uncertainty.This mirrors a broader trend. Central banks globally have been consistently adding gold to their reserves, reinforcing the metal's status as a defensive asset during crisis periods.'Gold has long held its ground as a traditional safe haven during periods of geopolitical and economic uncertainty,' said Prasanna Pathak, Managing Partner at The Wealth Company. 'Its intrinsic value, limited supply, and global acceptance make it a go-to asset when investors seek refuge from volatility.'Bitcoin, on the other hand, hasn't shown similar resilience. During the flare-up in the Middle East, Bitcoin fell from $109,000 on June 12 to $103,700 on June 17—wiping out nearly 5% in value. This mirrored the broader decline in risk assets such as equities, in stark contrast to gold's rally.A similar trend was observed during the Russia-Ukraine war in February 2022, when Bitcoin dropped from $45,000 to $35,000 in a matter of days.'While Bitcoin has emerged as a digital alternative and has its merits in portfolio diversification, its behaviour during recent geopolitical tensions suggests that it still reacts more like a risk asset than a crisis hedge,' Pathak added.Despite its short-term volatility, some experts believe Bitcoin is beginning to carve out a longer-term role in modern portfolios.'With institutional giants like BlackRock and Fidelity backing U.S. Bitcoin ETFs, and over $60 billion now held in these funds, Bitcoin is becoming a globally accessible store of value,' said Devika Mittal, Regional Head at Ava Labs. 'It's no longer just a speculative asset—it's earning a place in conversations around financial security.'Vugar Usi Zade of Bitget added, 'Bitcoin offers liquidity and insulation from government actions during crises, though its volatility remains higher than gold.'The recent geopolitical developments have rekindled the debate around which asset offers better protection during global crises. While gold has a long-established track record of stability in uncertain times, Bitcoin continues to evolve, drawing both interest and skepticism.Gold's consistent performance during recent market shocks reinforces its role as a dependable safe haven. Bitcoin, meanwhile, has shown potential but remains sensitive to investor sentiment and broader market volatility.As the global financial landscape shifts, both assets may continue to play distinct roles—gold as a traditional shield, and Bitcoin as a high-growth, alternative store of value with long-term promise.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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