According to a recent Bloomberg survey, most institutional investors still expect to maintain or increase exposure to gold over the next year. This moderately bullish outlook persists despite recent headwinds weighing on gold prices. For crypto markets also searching for direction, gold's resilience highlights the enduring appeal of hard assets amid economic uncertainty.
Institutional Investors Largely Bullish on Gold
The Bloomberg survey of hedge funds, wealth managers and other institutional investors found none plan to reduce gold allocations in the coming 12 months.
Over two-thirds see prices rising, with some forecasting new all-time highs above $2,000 per ounce in 2023. This constructive outlook on gold comes even as prices have dropped near $1,900, down about 8% from 2022 highs.
Lingering Macroeconomic Worries
Ongoing geopolitical tensions, recession fears and inflation concerns seem to be sustaining institutional demand for gold's perceived safety.
With central banks still aggressively tightening policy in the face of stubborn inflation, gold offers a hedge against both macro risks and currency debasement. Its non-interest bearing quality looks more appealing as rates rise.
Contrast With Growing Optimism on Economy
The persistent gold bullishness contrasts with growing optimism about the economy avoiding a sharp downturn. The Fed's rapid tightening remains a headwind for gold in the near-term.
However, worry over what’s next for global hotspots like China's real estate sector continues driving safe haven flows. Plus, gold diversifies portfolios as stock-bond correlations breakdown.
Crypto Markets Also Search for Direction
Like gold, cryptocurrency markets face considerable uncertainty and have struggled to find reliable direction. Ongoing macro volatility has suppressed crypto prices despite some bullish on-chain activity metrics.
Bitcoin and Ethereum remain highly correlated with volatile tech stocks. This environment makes valuing crypto assets extremely difficult.
Safe Haven Status Unproven for Crypto
Some technologists argue Bitcoin or other crypto assets could become "digital gold" safe havens as adoption grows. But that narrative remains unproven so far in Bitcoin's brief history.
In fact, cryptos have traded more like risk-on tech assets than havens during recent stock market swings. Gold has showcased more reliable countercyclical behavior so far.
Macro Trends Critical for Both Assets
Ultimately, broader monetary policy and economic trends will likely dictate price action for both gold and cryptos over the coming year. Any easing of inflation could boost gold and crypto markets; a deep downturn would pressure both.
This underscores the importance of tracking macro conditions rather than relying on day-to-day price movements when valuing volatile assets like gold and Bitcoin.
Will Bitcoin Become a Reliable Store of Value?
Bitcoin's long-term investment thesis relies heavily on the cryptocurrency evolving into "digital gold" - a scarce store of value immune to inflation. However, Bitcoin has yet to consistently demonstrate reliable safe haven properties during market turmoil.
Volatility Undermines Store of Value Appeal
Massive recurring drawdowns of 50% or more make it difficult to view Bitcoin as a stable long-term store of value thus far. This extreme volatility encourages speculation over buy-and-hold investing.
Until volatility moderates substantially, Bitcoin seems unlikely to fulfill the digital gold narrative and become a widely trusted inflation hedge.
Need for Macroeconomic De-Correlation
To be considered a safe haven, Bitcoin prices need to de-couple from moves in risky asset classes like stocks. Thus far, Bitcoin remains tightly correlated with speculative tech stocks.
As crypto markets mature, Bitcoin may start trading more on its own fundamental outlook rather than just following broader risk sentiment. But that transition remains early.
Long Track Record Required
Gold has established safe haven credibility over centuries. Bitcoin has only existed for 14 years thus far, limiting data on its behavior across market cycles.
Theoretically Bitcoin's digital scarcity makes it well-suited as a store of value, but more time is required to build institutional conviction. Only consistent performance over decades earns true safe haven status.
While crypto markets struggle to decouple from risk assets, gold continues exhibiting countercyclical safe haven appeal that Bitcoin has yet to reliably demonstrate. However, gold's thousands of years of proven value makes for an extremely high bar. Despite its volatility, Bitcoin's digital scarcity still gives it potential to become a trusted inflation hedge in time as adoption grows. But Bitcoin likely needs at least several more market cycles of consistent behavior before matching gold's reputation as an uncorrelated store of value.