You may have heard, but a crypto flash crash occurred on Friday, triggered by President Trump’s surprise announcement that he would impose additional tariffs on China and implement export controls on software.
That sparked a selloff in risk assets, from stocks to cryptocurrencies. The crypto flash crash resulted in mass liquidations of highly leveraged traders’ accounts, further fueling the plunge.
Thankfully, precious metals were some of the few beneficiaries, which, as I am going to discuss today, is confirmation that Bitcoin https://www.moneymetals.com/news/2024/08/23/is-bitcoin-really-digital-gold-comparing-and-contrasting-the-two-assets-003403" rel=”noreferrer”>no longer earns the right to be called “digital gold,” as many of its supporters claim. This event, along with many others, confirms that only gold stands in a class of its own as the safe haven asset par excellence.
With $19.31 billion in liquidations, https://www.moneymetals.com/bitcoin-price" rel=”noreferrer”>Friday’s crypto flash crash was more than ten times larger than the losses seen during the COVID-19 crash ($1.2 billion) and the FTX collapse ($1.6 billion). Scores of crypto traders, many from Generation Z, have taken to social media to vent and lament over blown-up trading accounts, with some losing millions of dollars in just minutes.
Much of the damage was self-inflicted, as many were leveraged 10, 20, 50 times, or even more. Sadly, there are even reports of crypto traders and influencers having taken their own lives, reminiscent of the 1929 stock market crash.
As a Bitcoin and crypto skeptic, I don’t find any of this surprising. It is a preview of how I expect the entire crypto experiment/bubble to end, which will ultimately favor the true safe-haven assets: gold and silver.
Of course, I am open to trading Bitcoin and other cryptocurrencies in the short term, as I have said many times before, but I have never been a true believer who sees it as a wise buy-and-hold-forever investment.
A look at the Bitcoin chart shows a drop from all-time highs of around $126,000 just a few days ago to a low of $107,000 during the worst of Friday’s flash crash:
https://www.moneymetals.com/uploads/content/Chart-1-Bitcoin-USD-Coinbase-Jesse-Colombo-Money-Metals-min.jpg" width=”800″ height=”616″ alt=”” style=”display: block; margin-left: auto; margin-right: auto;” />
The crash was broad-based across cryptocurrencies, as reflected by the Global 30 Crypto Index, which tracks major cryptos in a manner similar to how the Dow Jones Industrial Average tracks stocks.
Incredibly, the index plunged by as much as 30% from its early October peak to its lowest point on Friday.
https://www.moneymetals.com/uploads/content/Chart-2-Global-30-Crypto-Index-Jesse-Colombo-Money-Metals-min.jpg" width=”800″ height=”617″ alt=”” style=”display: block; margin-left: auto; margin-right: auto;” />
What’s worth noting, and is the crux of my report today, is the stark difference in performance between Bitcoin and gold during Friday’s risk asset crash. As the intraday chart below shows, gold came out smelling like roses, while Bitcoin plunged.
And this isn’t the first time we’ve seen this pattern. I’ve https://thebubblebubble.substack.com/p/is-bitcoin-a-safe-haven-amid-geopolitical" target=”_blank” rel=”noopener noreferrer” data-saferedirecturl=”https://www.google.com/url?q=https://substack.com/redirect/b41cf237-73a4-4a48-816c-ced76eaf43a4?j%3DeyJ1IjoiMWI5YWl3In0.o-RJcumCJm32z0-fPDbsH8ksWzk3G2-ENra_QtGncpM&source=gmail&ust=1760443185886000&usg=AOvVaw3MZ-6YYe5bKa5MHqp0HH31″>documented it several times before, particularly in response to geopolitical events where risk assets, including Bitcoin, sell off while gold surges.
To me, that is clear evidence that Bitcoin does not behave like a safe-haven asset the way gold does. This is why I believe it is time to https://www.moneymetals.com/news/2025/03/12/why-bitcoin-is-not-equal-to-gold-003904" rel=”noreferrer”>stop calling Bitcoin “digital gold,” as that label is, quite simply, disingenuous.
https://www.moneymetals.com/uploads/content/Chart-3-Gold-Spot-US-Dollar-Jesse-Colombo-Money-Metals-min.jpg" width=”800″ height=”616″ alt=”” style=”display: block; margin-left: auto; margin-right: auto;” />
I’ll show you a few more examples of the divergence between gold, the true safe haven, and Bitcoin, which I consider “digital fool’s gold,” during times of market stress.
The example below is from June of this year, when Israel struck Iran’s nuclear facilities in a fierce attack that reportedly killed at least 224 people.
In response, Iran launched a missile barrage targeting Israel, with several missiles breaching the Iron Dome defense system and striking major cities, resulting in at least eight fatalities.
https://www.moneymetals.com/uploads/content/Chart-4-Gold-Spot-US-Dollar-Coinbase-Jesse-Colombo-Money-Metals-min.png" width=”800″ height=”543″ alt=”” style=”display: block; margin-left: auto; margin-right: auto;” />
This pattern of gold outperforming Bitcoin has repeated itself during numerous other geopolitical crises—including the October 7th, 2023, attack on Israel, which ignited the current wave of Middle Eastern conflict and deeply polarized public opinion across much of the Western world:
https://www.moneymetals.com/uploads/content/Chart-5-Gold-Futures-Gold-Bitcoin-Jesse-Colombo-Money-Metals-min.png" width=”800″ height=”660″ alt=”” style=”display: block; margin-left: auto; margin-right: auto;” />
A similar pattern occurred during the Iranian strikes against Israel in https://en.wikipedia.org/wiki/April_2024_Iranian_strikes_on_Israel" target=”_blank” rel=”noopener noreferrer” data-saferedirecturl=”https://www.google.com/url?q=https://substack.com/redirect/a8b35030-4d12-478c-a9a0-25f7af6ff830?j%3DeyJ1IjoiMWI5YWl3In0.o-RJcumCJm32z0-fPDbsH8ksWzk3G2-ENra_QtGncpM&source=gmail&ust=1760443185886000&usg=AOvVaw09RAYV5nucm8oVXaP3ujJR”>April 2024:
https://www.moneymetals.com/uploads/content/Chart-6-Gold-Futures-Bitcoin-USD-Jesse-Colombo-Money-Metals-min.jpg" width=”800″ height=”671″ alt=”” style=”display: block; margin-left: auto; margin-right: auto;” />
That same pattern emerged again on October 1, 2024, when speculation swirled that Iran was on the verge of launching ballistic missiles at Israel:
https://www.moneymetals.com/uploads/content/Chart-7-Gold-Spot-US-Dollar-Bitcoin-Jesse-Colombo-Money-Metals-min.jpg" width=”800″ height=”699″ alt=”” style=”display: block; margin-left: auto; margin-right: auto;” />
Another point I have consistently made is that Bitcoin trades like a leveraged bet on the tech-heavy Nasdaq 100 stock index. This was clearly evident in Friday’s intraday price action, when both moved sharply lower in an almost identical pattern, in contrast to gold, which rose.
https://www.moneymetals.com/uploads/content/Chart-8-NASDAQ-100-Bitcoin-USD-Jesse-Colombo-Money-Metals-min.jpg" width=”800″ height=”615″ alt=”” style=”display: block; margin-left: auto; margin-right: auto;” />
One of my core concerns with Bitcoin, and a key reason I remain unconvinced by the hype, is that it behaves more like a speculative and volatile risk asset than a true safe haven.
As someone who expects a major economic crisis ahead, driven by unsustainable global debt and dangerous asset bubbles, that kind of behavior and volatility doesn’t appeal to me.
Instead, I strongly prefer gold and silver, which have stood the test of time for thousands of years and consistently proven to be reliable stores of value during periods of turmoil.
To support my point that Bitcoin behaves more like a risk asset than a safe haven, I showed in the chart below how closely Bitcoin tracks the Nasdaq 100, an index driven in recent years by high-growth, volatile tech stocks. These stocks perform well in favorable conditions but decline sharply during periods of stress.
I also analyzed weekly data starting in 2019 and found a striking 92% correlation between Bitcoin and the Nasdaq 100. This is an unusually high correlation and something every investor should consider carefully when evaluating Bitcoin’s role in a portfolio.
https://www.moneymetals.com/uploads/content/Chart-9-NASDAQ-100-E-mini-Futures-Bitcoin-Jesse-Colombo-Money-Metals-min.jpg" width=”800″ height=”613″ alt=”” style=”display: block; margin-left: auto; margin-right: auto;” />
I have two major concerns with Bitcoin’s high correlation to the Nasdaq 100. First, investors who hold both Bitcoin and tech stocks, which is very common, are far less diversified than they realize. Second, and more importantly, the Nasdaq and the broader U.S. stock market are in a massive bubble, with valuations exceeding even those seen during the late-1990s dot-com era.
That bubble ended in a brutal bear market, and I believe the current tech-driven rally is destined to meet fate. When that happens, there is a strong chance Bitcoin will fall alongside it, while gold and silver will benefit greatly as capital rapidly flows into traditional safe-haven assets.
Multiple valuation metrics confirm that the tech-heavy Nasdaq 100 is significantly overvalued. One particularly telling measure is the Nasdaq 100 to M2 money supply ratio, which compares the index’s performance against the growth of the money supply.
This ratio helps reveal whether the market is merely keeping pace with monetary inflation, outperforming it, or falling behind.
In this case, the Nasdaq 100 has dramatically outpaced M2—just as it did in the late 1990s, right before the dot-com crash. That’s a troubling omen not only for tech stocks but also for the highly correlated Bitcoin.
https://www.moneymetals.com/uploads/content/Chart-10-NASDAQ-Adjusted-M2-Money-Supply-Everything-Bubble-Jesse-Colombo-Money-Metals-min.jpg" width=”800″ height=”523″ alt=”” />
To summarize, Friday’s shocking flash crash in Bitcoin and other cryptocurrencies further reinforces my reasons for being skeptical of them and avoiding them as buy-and-hold investments, even though I remain open to trading them in the short term.
Cryptocurrencies are simply https://www.moneymetals.com/news/2024/12/12/why-gold-still-reigns-supreme-in-the-age-of-bitcoin-003678" rel=”noreferrer”>not in the same category as true safe havens like gold and silver. I hope this flash crash and the massive wave of liquidations serve as a wake-up call, and that investors stop referring to Bitcoin as “digital gold.”
A more realistic and honest assessment is that Bitcoin behaves more like a speculative risk asset, similar to a leveraged bet on tech stocks.
Unfortunately, I do not believe this will be the last such event. I expect a final, terminal crash that will mark the end of the mass appeal of cryptocurrencies. When that happens, I believe it will be a major turning point that drives significant capital into precious metals, sending their prices sharply higher.
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