Bitcoin Down? Why Are Central Banks Accumulating Tons Of Gold?

Bitcoin is sulking. Despite optimistic predictions, the flagship crypto is struggling to cross the $60,000 mark. This stalemate is worrying, especially since bullish levers are not lacking. However, even if gold is flirting with historic highs, Bitcoin remains at the top of performance in 2024. But why do central banks prefer to accumulate tons of gold rather than turn to Bitcoin?

Bitcoin on the razor’s edge 

Bitcoin has remained intriguing this year, oscillating near $60,000 without being able to cross this critical threshold. Since its peak in March, the value of bitcoin has dropped by 22%, leaving investors wondering if it will ever resume its upward march. It is even estimated that the September storm is approaching for the queen of cryptos.

This isn’t for lack of enthusiasm on the part of crypto promoters. Despite the launch of the first bitcoin exchange-traded funds in the United States, the flagship crypto remains bogged down in uncertain dynamics.

• Bitcoin increase in 2024: +37%;
• Comparison with S&P 500: +18%; 
• Gold: +23%, reaching $2,525/oz in August.

Gold proponents like Peter Schiff do not fail to point out that bitcoin’s gains were only realized at the beginning of the year, before stagnating. However, despite these fluctuations, BTC continues to outperform gold in terms of annual performance.

Are central banks ditching crypto for gold?

While Bitcoin falters, central banks are rushing to gold. In the first half of 2024, they bought a record 483 tons of this precious metal, surpassing the previous record of 2023.

BREAKING: Global net gold purchases by central banks reached 483 tonnes in the first half of 2024, the most on record.

This is 5% higher than the previous record of 460 tonnes set in the first half of 2023.

In Q2 2024, central banks bought 183 tonnes of gold, marking a 6%… pic.twitter.com/dtu2YoWFJv

— The Kobeissi Letter (@KobeissiLetter) September 1, 2024

The choice of gold, perceived as a neutral and stable asset, reflects growing distrust of traditional reserve assets, particularly those in dollars. 

Nations like Poland, India, and Turkey are massively increasing their gold reserves, following a global trend that sees gold establishing itself as the ultimate safe haven.

As Spencer Hakimian points out, “mistrust of Western assets” is driving these countries to turn to gold, a non-volatile and neutral asset.

Gold, with its 23% increase in 2024, becomes the fallback solution in the face of growing uncertainty in global markets. 

The rise of a stable crypto or gold-backed stablecoin by the BRICS could further reinforce this trend, while bitcoin, despite its advantages, remains on the sidelines of central bank strategies.

Faced with a hesitant bitcoin, experts remain divided: an imminent collapse or a spectacular rebound? Bets are open, but uncertainty reigns supreme.