Investors are finding reasons to stay away from both the volatile crypto space and the normally safe-haven investment that is gold. The price of Bitcoin is currently hovering at around $16,500, down from $20,000 just a week ago as the world’s biggest digital coin reacts negatively to the implosion of cryptocurrency exchange FTX.
FTX, once a unicorn startup that was valued at $32 billion earlier this year, is facing an existential crisis with scrutiny from regulators and a merger with its rival Binance that is now highly uncertain. Already, Bitcoin’s high of $69,000 seems like a long time ago as investors seek to cut their losses in digital assets, further pushing crypto prices into basement territory.
However, there has been no respite for investors seeking the comforts of safe havens as gold prices have fallen 6% this year. Investors are now stuck. Are both gold and crypto able to recover? The strength of the US dollar has hurt both markets with investors questioning why they should buy gold or digital assets when the greenback is currently the king of all currencies.
What does this mean for me?
Some experts are cautioning that bitcoin has historically had big swings up and down. Talks of a crypto winter should not gain momentum simply because of the problems at FTX. However, the continued strength of the dollar should be a headwind for gold for some time to come as the currency is not expected to weaken substantially anytime soon.