Geopolitical Crisis May Benefit Oil, Gold and CBDCs, Not Bitcoin

Demand for gold is skyrocketing and the clamor for scarce assets in a remote-first world was precisely where bitcoin was supposed to shine.

However, rather than creating a perfect scenario for the supranational money, the coronavirus crisis could instead entrench reliance on traditional institutions. In a world where central bank digital currencies (CBDCs) from major economies are fast approaching, bitcoin settlements may appear less attractive to compliance-focused financial entities.

As for short-term market signals, it’s more common for big traders to turn to oil or gold these days, according to eToro CEO Yoni Assia.

“The Saudi-Russia-U.S. competition on lowering the price of oil has added a lot of fire … some days [oil] is now the most traded asset on eToro,” Assia said. “There’s been a significant squeeze on the ability to purchase dollars. … There are liquidity issues but we’re still not at the point of 2008.”

Assia said overall activity on eToro is up in March, including cryptocurrency trades, with gold purchases in particular at an “all-time high.” These traders bought $7.4 billion worth of gold in the first week of March alone, he said. While retail investors have increasingly turned to bitcoin, the volume they’re moving during the downturn is nothing compared to activity associated with other hard assets.

Read more: Retail Investors Are Buying the Bitcoin Institutions Are Selling, Traders Say

“Gold price and flow is determined by the real rate of interest,” Roy Sebag, founder of precious metals custody firm Goldmoney, said, adding that Russian gold markets are impacted differently because they don’t rely on dollars. “The [U.S.] Federal Reserve completely changed the rules – the real rate of interest [including inflation] swung even more into the negative and so we are seeing all that savings flow into gold immediately.”

Rumors abound that institutions are short on physical assets like gold. Sebag said the coronavirus…

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