The Paxos gold-backed digital asset experienced a significant surge in value over the weekend amidst escalating tensions in the Middle East, prompting some to question Bitcoin’s role as a geopolitical hedge. On April 13, the PAXG token reached $2,855 while Bitcoin prices plummeted from over $67,500 to around $62,700 in a 7.5% daily decline. Bob Elliott, co-founder and CEO of Unlimited Funds and former executive of Bridgewater, stated that while Bitcoin may serve various purposes, it is not an effective geopolitical hedge. He pointed out that the recent Iranian drone and missile attack on Israeli targets in the Middle East further intensified geopolitical tensions in the region. Elliott noted that BTC and PAXG traded with a near-perfect negative correlation over the weekend, indicating that Bitcoin is becoming a worse hedge over time. Although the PAXG token could not sustain its momentum and returned to its previous spot gold-linked price level of around $2,376, it has shown gradual progress since March, rising 20% in line with the price of gold. However, critics highlighted the token’s limited liquidity, with a daily volume of just $36 million compared to other high-cap crypto assets that trade in the billions. Glassnode on-chain analyst “Checkmatey” dismissed claims that the price of the illiquid gold token trading higher was a criticism of Bitcoin. Elliott also drew comparisons between Bitcoin’s market behavior during the Hamas attack on Israel in October 2021 and the Russian invasion of Ukraine in February 2022. He observed that Bitcoin and gold exhibited inverse correlations during these events, suggesting that Bitcoin is not a reliable store of value asset from a geopolitical perspective. However, Bitcoin had already begun its recovery from the weekend slump, reaching over $65,800 in early trading on April 15.
Bitcoin questioned as PAXG reaches record high amidst Middle East tensions