This week has been truly brutal for the entire cryptocurrency sector, with the prices of major currencies like Bitcoin and Ethereum crashing at least 30%. The overall sector has shed trillions of dollars in value.

The recent carnage for holders of digital currencies could be due to a variety of factors including profit taking spurred by Elon Musk, an easing of inflation worries, or concerns about new regulations coming down the pike.

Whatever the case may be, some of the capital that recently left the crypto space has found its way into the gold and silver markets. This trend could continue as well, with precious metals gathering strength and with Bitcoin still having plenty of room to fall further.

Bitcoin hit its lowest price since January as the People’s Bank of China has reiterated its view that the tokens cannot be accepted as a form of payment.

Since 2017, China has become an increasingly difficult adversary for cryptocurrencies and virtual products. The communist nation has banned initial coin offerings while also forcing many exchanges to move overseas.

China has been known to implement capital controls as it seeks to control the ebb and flow of currency within its borders.

A cryptocurrency can make these controls impossible to execute, however, as funds can be swiftly and easily transferred overseas.

The only digital currency that would allow China to maintain capital controls would be the issuance of its own digital currency. China has reportedly already taken steps to introduce its own digital yuan, and the country looks to become more aggressive in the space.

In addition to China, the Bitcoin and crypto markets have also been negatively impacted by comments from Tesla chief Elon Musk.

Tesla recently purchased a large sum of Bitcoin as Musk seemingly wanted to push the use of the currency. Tesla has, however, reportedly retracted the notion that it will accept Bitcoin as payment.

Further commentary by Musk over the last several days has only added to the confusion.

The uncertainty surrounding cryptocurrencies has provided the gold market another boost. Although cryptos may be unregulated and can act as a hedge against rising inflation or weaker paper currencies, they do not have the long, reliable history that gold bullion does.

Given gold’s timeless role as a store of value and protector of wealth, some investors concerned about long-term capital preservation are likely to reconsider their affinity digital assets and turn toward bullion instead.

Meanwhile, rising Middle East conflicts are also fueling gold’s recent rise.

Israeli warplanes pounded Gaza this week in the face of Hamas rocket attacks on Israel, and any escalation in the conflict will underpin the bull case for precious metals.

To be sure, the current economic and geopolitical backdrops – while negative in many ways – are highly positive for gold and silver. But they’ve always been a hedge for turmoil.

If you already own some physical gold and silver bullion, now may be a good time to consider adding more. For those who do not currently own any of the monetary metals, it’s hard to imagine what else they could be waiting for!

Money Metals Exchange and its staff do not act as personal investment advisors for any specific individual. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. Readers and customers should be aware that, although our track record is excellent, investment markets have inherent risks and there can be no guarantee of future profits. Likewise, our past performance does not assure the same future. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing through Money Metals, you understand our company not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. This Website is provided “as is,” and Money Metals disclaims all warranties (express or implied) and any and all responsibility or liability for the accuracy, legality, reliability, or availability of any content on the Website.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD has lost its bullish momentum after having climbed above 1.0570 with the initial reaction to the US data in the American session and retreated toward the mid-1.0500s. On a weekly basis, the pair remains on track to close in positive territory. 

EUR/USD News

GBP/USD struggles to hold above 1.2300

GBP/USD struggles to hold above 1.2300

GBP/USD has edged lower following a jump above 1.2300 in the early American session on Friday. The market mood remains upbeat ahead of the weekend with Wall Street's main indexes posting strong daily gains on upbeat US data. 

GBP/USD News

Gold stays below $1,830 as US yields edge higher

Gold stays below $1,830 as US yields edge higher

Gold continues to fluctuate below $1,830 on Friday and looks to close the second straight week in negative territory. Fueled by the risk-positive market environment, the benchmark 10-year US Treasury bond yield is up more than 1% on the day, limiting XAU/USD's upside.

Gold News

Why Cardano could surprise over the weekend

Why Cardano could surprise over the weekend

ADA  set to close out the week with a gain on the workday trading week and over the weekend? Central banks signaled that the rate hike cycle is ending, meaning less stress and tight conditions for trading, opening up room for some upside potential with Cardano set to pop above $0.55 and test a significant cap.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Majors

Cryptocurrencies

Signatures