Bitcoins Rising Tide: Is Gold Losing Its Shine as the Go-To Safe Haven?

As Bitcoin makes a push towards a new all-time high, U.S. citizens are increasingly wondering how to obtain more of this digital gold. In their quest, many are willing to exchange a portion of their precious metal holdings.

Over the past decade, the Volatility Index (VIX) has entered panic territory eight times, with its «COVID peak» hitting 80, surpassing the 2008 crisis record.

Known as the «fear index,» the VIX forecasts future volatility in the S&P 500 by analyzing options data from the Chicago Board Options Exchange (CBOE). Essentially, it provides a glimpse of how drastically the market capitalization of the 500 largest global companies could rise or fall.

Meanwhile, the U.S. dollar is also sending concerning signals. The USD index chart since late 2022 begins to resemble the beginning of a significant decline, echoing the downturn from the 2002 peak to the 2008 crisis.

This situation is not conducive to investor confidence and highlights an approaching shift in the dynamics of global finance.

Government bonds, traditionally seen as a safe haven in stock market downturns, are currently underperforming. However, they still remain part of investment portfolios for top figures and partially back certain stablecoins like USDT. Since 2021, these financial instruments have been unable to reverse the bearish trend.

The combination of these alarming indicators, along with global political and macroeconomic shifts, has prompted experts to publish books on alternative saving strategies, continuously emphasizing the need to invest in precious metals and digital assets.

Ray Dalio, founder of the largest hedge fund, Bridgewater, has repeatedly stated at conferences:

*“If you don’t own gold, you don’t understand history or economics.”*

Similar sentiments are echoed by Peter Schiff, president of Euro Pacific Capital and a Bitcoin skeptic, alongside investor Michael Burry, who correctly predicted the 2008 financial crisis.

The inclusion of Bitcoin in the national reserve funds of some countries signals to billions the future direction of the global financial system. A pressing question remains: Will there still be room for the dollar in this landscape, and what will money look like in five years?

The trend of incorporating Bitcoin into the investment portfolios of mid-tier companies is gaining traction, with updates about the trend emerging weekly.

As the leading cryptocurrency, Bitcoin, drives the altcoin market, it has become a tool for political and economic speculation, with its correlation to the traditional financial system reaching noteworthy levels. This is evident in the cryptocurrency market’s reactions to recent statements from Donald Trump and updates from the Federal Reserve.

While the widely anticipated «Nakamoto» future — where 1 BTC equals 1 BTC — has yet to materialize, individuals must decide how to store their wealth. With price swings ranging from approximately $50,000 to $250,000, an alternative and reassuring factor is needed for the upcoming five to ten years. Gold remains the answer.

The demand to convert Bitcoin into gold has become evident. While major banks are beginning to facilitate purchases of Bitcoin, American citizens are ready to exchange their precious metal holdings for BTC.

According to a recent survey, four out of five Americans agree to convert a portion of the national gold reserves into Bitcoin. The Nakamoto Project surveyed 3,345 respondents, most of whom prefer converting up to 30% of their gold. On average, respondents are open to 10%, while the younger demographic (under 35) is the most eager to own Bitcoin.

Let’s explore which countries and companies are accumulating these two assets faster than the rest.

In recent years, cryptocurrency companies have aggressively purchased Bitcoin. However, none have come close to the leader, Strategy, which holds over 580,250 BTC. The second-largest holder, miner MARA, has roughly 49,230 BTC, followed by Metaplanet with 8,888 BTC.

For the third consecutive year, central banks around the globe have purchased over 1,000 tons of gold for their reserves: in 2024, they acquired 1,045 tons, up from 1,037 tons in 2023, with 2022 setting the record at 1,082 tons.

Central banks remain the leaders in net gold purchases, with Uzbekistan, China, and Kazakhstan being the top buyers. Poland and India are also continuing to build their gold reserves, with both central banks adding 3 tons to their holdings in January 2025.

This pace could indicate that countries are hastening preparations for a transitional phase in the global economy.

Jim Rickards, a former CIA and Pentagon advisor and author of «The New Case for Gold,» refers to gold not held by individuals as “paper gold.” He warns that in times of crisis, governmental entities may freeze or confiscate it.

Countries have often requested the repatriation of their reserves, but this process is not always smooth.

In the 1960s, French President Charles de Gaulle demanded the return of France’s gold reserves from the United States, fearing that the U.S. balance of payments deficit could undermine the Bretton Woods system and devalue the dollar.

As a result, France initiated a secret operation called Vide-Gousset, successfully repatriating 3,313 tons of gold reserves from vaults in New York and the Bank of England in London between 1963 and 1966. In February 1965, de Gaulle publicly announced his intention to exchange France’s dollar reserves for gold at the official rate and sent a fleet across the Atlantic for that purpose.

France’s actions put significant pressure on U.S. reserves and contributed to President Richard Nixon’s 1971 decision to sever the dollar’s gold link, effectively ending the Bretton Woods system.

Countries storing their gold abroad face challenges:

For most Western residents, access to investing in physical gold is limited. Buyers either face substantial taxes or bureaucratic hurdles.

In Asia, however, the situation differs. India has a low purchase tax of 3%, and the import duty for 2024 has been reduced from 15% to 6%. In China, standard gold sold through the Shanghai Gold Exchange is exempt from VAT.

Thailand supports free trade but will implement a 7% VAT on all imported goods, including gold, starting July 5, 2024, regardless of their price. Domestically, precious metals can be purchased at numerous jewelry stores and licensed dealers. The standard purity is 96.5% (23 karats), and gold is often sold as jewelry, bullion, or coins.

In Dubai, there is a zero import duty on gold and a 5% VAT on its sale. In Saudi Arabia, gold with a purity of 99% and above, intended for investment purposes, is exempt from taxation. Qatar does not impose taxes on any transactions involving precious metals.

In some countries, purchasing bullion is subject to relatively high VAT — for example, Japan has a rate of 10%.

While the crypto community anticipates new highs for Bitcoin, the Federal Reserve is planning its next move. Its nature remains uncertain, but the assertive policies of President Donald Trump leave room for potential records on the VIX index and accelerate changes.

Cryptocurrency market volatility can swiftly wipe out about 40% of accumulated value in a single day. Long-term investors are less concerned with price fluctuations over a five-year period. During downturns, large investors buy the asset that smaller investors panic-sell, then sell it in smaller quantities during rises, only to repurchase at lower prices.