The Middle East crisis continues at full speed. Gold has been dominating commodity markets in recent weeks. Bitcoin, on the other hand, increased its crypto market share to a 2-year peak. Historical data reveals how gold and Bitcoin have performed during previous periods of economic turmoil, providing a prediction of how they will perform in the coming weeks. Market expert Ibrahim Ajibade looks at which is a better investment product from this perspective.
Gold is more resilient than Bitcoin in crashes
cryptokoin.comAs you follow from , the Covid-19 virus broke out in early 2022. During this period, it caused an immediate sell-off in risky assets, including global stocks, commodities and crypto markets. Meanwhile, gold and Bitcoin stayed out of the initial market crash. However, weeks later, both assets showed positive performances, reversing global trends.
During the Covid-19 breakout, historical price charts show BTC falling by 64%. On the other hand, the gold price fell by only 11%. In this case, gold showed more resistance than BTC. Additionally, shiny metal investors suffered 53% fewer losses. Similarly, between February and May 2022, the price of Bitcoin fell by 28% when the war between Russia and Ukraine broke out. By comparison, gold took a hit of just 9%. Thus, it has again surpassed BTC in the resistance game.
During bull market periods, BTC outperforms gold!
But in terms of recovery, historical data shows that BTC holders were the biggest winners in both cases of global economic turmoil. As you can see above, Bitcoin staged a 204% recovery between March 2020 and August 2020 as markets began to recover from Covid-19 losses. During this period, gold witnessed a price increase of only 36%. As markets recovered from the devastating impact of the Russia-Ukraine war, BTC again gained 93%. On the other hand, gold increased by only 23%.
How did BTC and gold perform during the Middle East crisis?
More recently, around October 7, 2023, a geopolitical crisis broke out between Israel and Palestine. Similar to Covid-19 and Russia-Ukraine war data trends, both gold and Bitcoin have made significant gains, fueling the recovery of crypto and commodity markets. As you can see in the chart below, between October 7 and October 24, the Bitcoin price gained 27%, from $27,200 to a yearly peak of $34,500. Gold gains are only approaching the 10% limit.
What should investors expect from gold and Bitcoin?
In summary, analysis of historical price data reveals two vivid conclusions. First, whenever an economic crisis breaks out, gold becomes a more durable safe haven asset than BTC. But more importantly, once markets stabilize, Bitcoin is more likely to deliver superior profits. Therefore, the situation changes depending on the trading strategy. More conservative investors may prefer gold to avoid negative price fluctuations in the short term. But conversely, investors with a higher risk appetite will likely prefer BTC.
Looking at historical price data, BTC is likely to post larger gains during the ongoing market rally. BTC has surpassed the 50% price recovery mark following recent periods of economic turmoil. Considering this situation, Bitcoin price will likely rise above $45,000. Meanwhile, investors can expect the gold price to reach the $2,200 level. This translates into a more modest gain of around 20%.
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