Hi! I’m Psy. Recently, everyone seems to be discussing the abstract concept of safe-haven assets. I think we can explore in depth why physical gold is definitely a safe-haven asset, but Bitcoin is not currently?

Let me first say the conclusion. Bitcoin is a hedge tool and is definitely not a safe-haven asset, at least not in the short term.

First of all, gold, a symbol of wealth with thousands of years of history, has always maintained its status as a safe-haven asset in the global financial market. Whenever there is economic turmoil, soaring inflation, or escalating geopolitical tensions, gold can always be a solid safe haven for investors. In contrast, although Bitcoin is regarded as "digital gold" by some avant-garde investors, it seems that it has not yet been able to keep pace with gold in the real test of safe haven.

Gold's safe-haven status is first of all due to its profound historical accumulation and global consensus. For thousands of years, gold has been a symbol of wealth and power, and both ancient dynasties and modern central banks have regarded it as an important reserve asset.

This long history and universal acceptance have earned gold a deep trust from investors around the world. Central banks around the world generally use gold as a reserve asset to enhance the country's financial security. This global consensus and trust makes gold a safe haven for investors in various crises. For example, during financial crises, wars, or political uncertainties, gold is usually heavily bought and its price often rises as a result.

Gold's value-preserving properties are also a key factor in its becoming a safe-haven asset. The limited supply of gold and the difficulty in mining make it less likely to fluctuate dramatically due to changes in market supply and demand. In times of inflation, gold is able to maintain its intrinsic value and become a weapon for investors to resist currency depreciation.

What about Bitcoin? Although it has attractive features such as decentralization and anti-inflation, it is incapable of hedging. Bitcoin's price volatility is too high and is easily affected by market sentiment, regulatory policies and technical issues.

For example, during the Russia-Ukraine conflict in 2022, when the Russia-Ukraine war broke out in February 2022, the price of gold rose rapidly. As a safe-haven asset, the price of gold rose from about US$1,800 per ounce in early January to over US$2,000 per ounce in early March. Investors flocked to gold in the early days of the war, highlighting its safe-haven value. In contrast, Bitcoin underperformed during this period. At the beginning of 2022, the price of Bitcoin was approximately US$43,000, but it fell at the beginning of the war and fell to approximately US$37,000 at the end of February, with significant short-term volatility. Although there was a partial rebound, the overall trend was in sharp contrast to gold's steady rise.

To give another example, at the beginning of the COVID-19 global pandemic in 2020, the demand for gold as a safe-haven asset surged and its price continued to rise. After the global stock market crashed in March 2020, the price of gold gradually rose from around $1,600 to a historical high of nearly $2,075 per ounce in August.

Bitcoin performance: During the same period, Bitcoin's performance was extremely volatile. When the global market panicked in March 2020, Bitcoin fell sharply from about $9,000 to about $4,000, a drop of more than 50%. Although it rebounded in the following months, its sharp fluctuations in the short term showed its lack of safe-haven ability.

The sharp fluctuations in the stock market also reflect the divergence of safe-haven assets. In the second half of 2018, global stock markets adjusted drastically due to concerns about the US-China trade war and economic slowdown. During this period, gold rose steadily from around $1,200 to around $1,300 in the second half of 2018, showing strong safe-haven demand. During the same period, Bitcoin performed poorly throughout 2018, falling from around $17,000 at the beginning of the year to around $3,000 at the end of the year, a year-on-year decline of more than 80%. This plunge reflects that its market sentiment is extremely volatile and it is difficult to play a stable safe-haven role.

In addition, Bitcoin lacks widespread trust and consensus. Although Bitcoin has many supporters, it has not gained the same trust as gold on a global scale. Bitcoin has a relatively short market history of only more than a decade, while gold has been tested for thousands of years. This trust gap makes it difficult for Bitcoin to become the first choice for investors in times of crisis.

Of course, we cannot deny the potential and innovation of Bitcoin. With the development of the market and the improvement of supervision, Bitcoin may gradually accumulate trust and consensus, reduce volatility, and become a safe-haven asset similar to gold. But at present, gold is still the preferred safe-haven asset for investors in times of crisis, while Bitcoin is not.

Final Thoughts

In my opinion, gold has firmly established itself as a safe-haven asset due to its history, value-preserving properties, and global trust. Although Bitcoin has the potential to become "digital gold," its current market characteristics make it difficult to compare it with gold for the time being. Gold and Bitcoin currently show obvious differences in their roles as safe-haven assets, reflecting the different needs and expectations of the market and investors for stability and value storage. In any case, we need to remain rational and cautious and make wise investment decisions based on market conditions and our own needs. In this investment marathon,