Time to rethink the ‘digital gold’ narrative as Bitcoin trails equities selloff

The world's most popular cryptocurrency, Bitcoin, has led Sunday's digital coin selloff, dipping below its US$79,000 to US$80,000 support level

The world’s most popular cryptocurrency, Bitcoin, has led Sunday’s digital coin selloff, dipping below its US$79,000 to US$80,000 support level – a position it has held for the past month despite wider market ructions – as volatility grips crypto markets and investor sentiment shifts to ‘risk-off’.

Bitcoin is currently trading at US$76,869 per coin, down nearly 12% on the month-to-date.

This decline has been particularly galling for Australian crypto investors, with the AUD’s underperformance against the USD and Euro exacerbating losses.

For Charlie Sherry, head of finance and a crypto analyst at trading platform BTC Markets, Bitcoin’s Sunday selloff was “unsurprising”, given that it occurred at “a time when global markets are generally more illiquid”.

“As a result, a few large selloffs can have a disproportionate impact, pushing prices down quickly.”

Like the mass equities selloff, the trigger for the crypto retreat is “no mystery”, according to Sherry, being a direct response to the Trump Administration’s tariff agenda, which is bulldozing longstanding trade relationships.

“For a moment, it seemed as though crypto might hold steady, but with the 24/7 nature of crypto markets, investors woke up on Sunday in full ‘sell mode’,” Sherry said.

Trailing the path of equities sell-off, with the S&P 500 also losing 10% over the last week, Bitcoin is showing an increasingly strong correlation with risk assets, he noted – hardly the safe haven holding it is often touted as by its most ardent evangelists.

Gold, seen as the “traditional safe-haven asset” in times of economic tumult, surged to US$3,167 at the end of the Q1 – up nearly 18% over the quarter. For Sherry, this divergence undermines the narrative that Bitcoin can and should be regarded as a digital analogue of gold holdings.

“Bitcoin hasn’t seen the same kind of demand that gold has, despite both assets sharing similar characteristics.”

According to some estimates, Bitcoin’s average annual volatility over the past decade sits at 46.31%; this contrasts sharply with gold’s 15.44% volatility rating over the past 30 years.

Sherry notes that crypto investor sentiment has taken a “decidedly cautious turn”, now sitting within the ‘extreme fear’ range of the Crypto Fear & Greed Index.

“This suggests a sense of trepidation among crypto investors as they weigh the broader economic uncertainties.”

Triggers for a Bitcoin breakout

Bitcoin’s sub US$79,000 decline – more than half the value of its pre-Trump inauguration high-water mark of US$167,170 per coin hit on 18 January 2025 – marks “the bottom of the range after the all-time-high pullback”, Sherry said.

The next key support lies around $72,000 – the pre-Trump election high point.

Sherry notes two key breakout triggers for Bitcoin investors to watch for:

“As the markets remain highly sensitive to macroeconomic and geopolitical events, Bitcoin’s ability to reclaim the $80,000 threshold and hold it will likely dictate the next phase of its price movement. Until then, volatility is expected to remain a prominent feature of the market,” he concluded.