In the midst of the ongoing conflict between Israel and Hamas, two assets have emerged as frontrunners in terms of notable price increases – bitcoin and gold. As the geopolitical tension continues to impact financial markets, many investors are keen to determine which asset will outperform the other during this volatile period.
The Israel-Hamas war, which began three weeks ago, initially brought gold’s price against the dollar to a local low of approximately $1,830. Consequently, the precious metal experienced a decline of 7%, causing it to lose its yearly gains. However, as political uncertainty permeated the market, gold swiftly embarked on a significant upward trajectory. It quickly recaptured the $1,900 threshold, surpassed the coveted $2,000 mark late on Friday night, and has since surged by around 10% since October 6.
Bitcoin’s performance has mirrored that of gold to a certain extent, although speculation suggests that its rise may also be linked to the possibility of the approval of a Bitcoin exchange-traded fund (ETF) in the United States. However, it is essential to note that such a product is yet to materialize. Bitcoin’s price initially stood at roughly $28,000 when the conflict commenced but experienced a minor dip below the $27,000 mark. However, it swiftly regained momentum, with its trajectory occasionally influenced by misinformation. The most significant price surge occurred on Monday and Tuesday when the cryptocurrency skyrocketed by several thousand dollars, culminating in a 17-month high above $35,000. Although it has retraced slightly since then, bitcoin currently trades above $34,000, amounting to three-week gains of approximately 23%.
When confronted with the question of how bitcoin and gold would fare amidst the ongoing war, an AI chatbot refrained from providing a direct answer. Instead, it asserted that both assets can be influenced by a multitude of factors, including political events, economic conditions, and investor sentiment. The AI emphasized the unpredictability of future performance, highlighting that past movements cannot serve as accurate predictors.
Regarding the inquiry into whether bitcoin or gold is the superior safe haven asset, the AI chatbot opined that gold possesses a solid track record as a reliable hedge against inflation. It has demonstrated its ability to preserve its value over extended periods, even during times of high inflation. On the other hand, bitcoin is often hailed as “digital gold” and is seen by some as a potential hedge against inflation due to its limited supply and the belief that it could serve as a store of value in the digital age.
As the conflict between Israel and Hamas rages on, both bitcoin and gold have showcased impressive price increases. However, predicting their future performance remains a precarious task. While gold has a historical reputation as a safe haven asset, bitcoin’s emergence as a potential hedge against inflation cannot be undermined. As the battle between these two assets intensifies, investors must carefully consider their investment strategies and the unique properties each asset brings to the table. Ultimately, the outcome of this battle will shed light on the enduring question: in times of crisis, which asset will emerge triumphant?