Over the recent weekend, as tensions in the Middle East escalated following an Iranian drone and missile attack on Israeli targets, the digital asset market saw divergent reactions between two prominent cryptocurrencies. PAX Gold (PAXG), a gold-backed token by Paxos, soared to a new high of $2,855 on April 13, while Bitcoin experienced a significant drop, plummeting $5,000 from over $67,500 to approximately $62,700, a decrease of 7.5% in a single day, according to CoinGecko data.
This stark contrast in performance has led to renewed scrutiny of Bitcoin's effectiveness as a geopolitical hedge. Bob Elliott, the co-founder and CEO of Unlimited Funds and a former executive at Bridgewater Associates, commented on social media platform X, “Bitcoin may be many things, but it is not a geopolitical hedge.” He observed a near-perfect negative correlation between Bitcoin and PAXG during this period, suggesting that Bitcoin's utility as a hedge may be diminishing over time.

While PAXG reached a peak coinciding with gold, which hit $2,400 per ounce last week, its momentum was short-lived, retreating to a spot gold-linked price of around $2,376. Despite the token's progress, climbing 20% since early March, it faces challenges such as low liquidity—its daily trading volume is around $36 million, significantly lower than more established cryptocurrencies.
On-chain analyst "Checkmatey" from Glassnode criticized market commentators using the temporary price increase of PAXG to undermine Bitcoin, labeling such comparisons as non-serious. Meanwhile, historical data highlighted by Elliott pointed to similar market behaviors in the past, including during the October 7 Hamas attack on Israel, where Bitcoin fell and gold rose. He further noted that during the Russian invasion of Ukraine in February 2022, Bitcoin's price movements were relatively random and confined to a tight range, whereas gold prices surged by 12% during the same period.
Despite recent challenges, Bitcoin has shown resilience, beginning its recovery early on April 15, with prices reaching $65,800. Elliott’s final take was clear, stating, "Along the geopolitical dimension, it's pretty conclusive BTC is not ‘digital gold.’”
This development underscores the complexity of cryptocurrency markets and the varied roles different assets may play in investors' portfolios, particularly in times of geopolitical uncertainty.
$BTC $PAXG
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,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“

Our experts told about opportunities to invest in crypto-assets with a link to the price of gold

It's been more than 35 years since The Economist magazine published a cover story titled "Get ready for a world currency" with the name Phoenix and the year 2018 minted on the coin. This magazine partly influenced the credibility of bitcoin and cryptocurrencies, but many people don't know about the story until now. The first notable hype around cryptocurrencies happened just in 2017-2018. And the top of the cryptocurrency market capitalization of that period was formed on January 8, 2018. The magazine was published on January 9, 1988, it said that in 30 years people will buy goods online and all price tags will be indicated in the new world currency.

Fiat currencies aren't going anywhere. And it will be easier for states to manage their economies. It is possible that this is what the market maker took advantage of. And after all, thanks to this magazine, many people believed that in 2018 there was a new world currency, and bought cryptocurrencies at the peak of the price.

The main Bitcoin network was launched on January 3, 2009. And today it's 2023, and settlements are still predominantly in dollars, some continue to believe that Bitcoin will eventually become the world currency that it is. But there is another option. Our experts allow varianto that under the new world currency hides ordinary gold. But in digitized or tokenized form.

In this variant it can be divided into dust and instantly make payment. And the proof of its originality will be recorded in the blockchain. We, on the other hand, believe in the value of the Tether USD (USDT) stablecoin today. And which is issued in this way, on the blockchain and backed by real financial instruments.

News is emerging that the BRICS countries are going to launch their own currency.

And some sources believe that it will be pegged to the value of gold or backed by gold reserves. In such a case BRICS comes to exchange of goods and resources. And it is practically a barter system of settlements between the countries. Gold will act as a unit of measurement in mutual settlements. Thus, everything will return to the original idea, when the dollar was backed by the gold reserve.

The blockchain organization with DPoS (Delegated Proof-of-Stake) consensus is most suitable for building such a payment system. This consensus algorithm was first developed by Dan Larimer in 2013 for his BitShares project. The DPoS protocol is also referred to as a form of "digital democracy". The difference between DPoS and the Proof-of-Stake (PoS) algorithm. And on which Ethereum (ETH) or Cardano (ADA) operate, is the separation of network participants into block producers and voters. If we project this idea into the form of a supranational digital currency. And it will turn out that citizens of countries choose the government. And the government sets up a node to validate transactions. Sooner or later, elections will also take place on the blockchain, and such a consensus will become more transparent.

For such a payment network, for example, the architecture of the EOS cryptocurrency would fit well. But it is clear that the government will not use the blockchains of existing cryptocurrencies.

The new currency will probably be backed by commodities or raw materials. Not the growth of any one country's economy. It will be a separate network where each BRICS member will hold a node (node) of the network. When the consensus will be that even if one participant (node) of the network confirms a transaction (without considering the sender). And all others are against it, and such a transaction goes through, it will be called a multipolar world. In such a network, money will not be frozen by the decision of just one party, as in the case of the dollar or the euro. This would be the creation of a new model, where the old one would simply become obsolete and cease to be popular.

Investment option

Since the 2008 crisis, central banks have been actively buying gold. This has only happened once in history, before the dollar was decoupled from gold.

Today, you can buy tokenized gold, such as PAX Gold (PAXG). Each token is backed by one troy ounce of London gold in 400 ounce bars stored in Brink's vaults. If you own PAXG, you own the underlying physical gold. And held in the custody of the Paxos Trust Company. Tether also issues tokenized Tether Gold (XAUt), but it is less trusted.

Our experts believe that gold is a more promising instrument for value saving in the coming years.

Gold is trading at $1930 an ounce today. Short-term we expect growth up to $2390. $PAXG

#PAXG #BTC