Bitcoin Outshines Gold Amid Risk Aversion in Financial Markets

 

Omkar Godbole

Aug 8, 2019 at 17:40 UTC

Updated Aug 8, 2019 at 17:42 UTC

markets

Bitcoin is outperforming gold amid heightened uncertainty in the global markets.
The world’s most valuable cryptocurrency is currently trading at $11,700, representing 16 percent gains on a month-to-date basis. Meanwhile, gold, the traditional safe-haven asset, has added 6 percent this month.
The precious metal picked up a bid at $1,400 on Aug. 1 as the U.S. President Trump’s decision to escalate trade tensions with China triggered a flight to safety. The S&P 500, a global benchmark for riskier assets, fell 0.90 percent on the same day.
The risk aversion worsened earlier this week when China began allowing the Yuan to depreciate beyond the major psychological level of 7 per U.S. Dollar.
As a result, the S&P 500 fell to a two-month low of $2,822 on Monday and gold extended gains to hit a fresh 2019 high of $1,510 yesterday. Interestingly, bitcoin also found takers near $9,900 on Aug. 1 and rose to a one-month high of $12,325 on Tuesday.

Bitcoin a safe haven?

Bitcoin rising along with gold during times of stress in the global markets indicates the top cryptocurrency is being accepted as a new safe haven, according to CNBC Host Ran NeuNer.

Further, the recent rise in the leading cryptocurrency coincided with a sharp uptick in the S&P VIX index – Wall Street’s fear gauge, as seen in the chart below.

• VIX rose 10 percent on Aug. 1 and rose to a seven-month high of 24.81 on Monday. As of now, the fear gauge is seen at 17.75.
• Bitcoin jumped from $9,900 to $12,325 in six days to Aug. 6. The rally seems to have stalled with the VIX index pulling back from seven-month highs.

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