Gold and BTC: The Confrontation Over the Concept of "Safe Asset"

The year 2022 has provided a real-world test for the roles of Gold and Bitcoin during times of turmoil. History often praises Gold as a safe haven asset, and this was true in the first few months of the Russia-Ukraine war when gold prices surged. But as the FED began its rate hike race, the story changed. Gold is a non-yielding asset(. When bank deposit or bond interest rates rise, the opportunity cost of holding gold becomes expensive. As a result, gold ended 2022 sideways, not really generating returns despite soaring inflation. )
Meanwhile, Bitcoin reacted more like a highly leveraged tech stock. It is more sensitive to liquidity than inflation. The decline of BTC shows that in the short term, it still cannot serve as a safe haven like gold when facing interest rate shocks. However, looking at the recovery afterward, Bitcoin demonstrated a stronger rebound when capital started flowing back into the system. This suggests that Gold and Bitcoin serve different purposes in a portfolio: one to protect value against geopolitical risks, and the other to expect a boom when liquidity is abundant. #Colecolen