CryptoForDay

Your daily dose of crypto news

PAXG Soars Amid Middle East Tensions, Bitcoin in Question

2 min read

PAXG Soars Amid Middle East Tensions, Bitcoin in Question

Over the weekend, Paxos’ gold-backed digital asset, PAXG, reached an all-time high price, coinciding with increasing tensions in the Middle East. This led some to question Bitcoin’s effectiveness as a geopolitical hedge. PAXG surged to $2,855 on April 13, while Bitcoin plummeted by $5,000 within hours, dropping from over $67,500 to around $62,700. Bob Elliott, the co-founder and CEO of Unlimited Funds and a former executive of Bridgewater, stated that Bitcoin is not a geopolitical hedge. Geopolitical tensions escalated in the Middle East following an Iranian attack on Israeli targets using a drone and missiles.

Elliott pointed out that this recent event provided another empirical test, revealing a “near-perfect negative correlation over the last day” between BTC and PAXG. He argued that Bitcoin is becoming a worse hedge over time. The PAXG token couldn’t sustain its momentum and fell back to its previous price level of approximately $2,376. Despite this, PAXG has been steadily rising since March, increasing by 20% alongside the price of gold, which reached $2,400 per ounce last week.

Critics noted that PAXG has low liquidity, with a daily trading volume of only $36 million compared to major cryptocurrencies that trade in billions. Glassnode on-chain analyst “Checkmatey” dismissed those who considered the rise of the illiquid gold token as a negative reflection on Bitcoin. Elliott, Highlighted the similarities between Bitcoin’s market action last year following the Hamas attack on Israel and its current situation. Gold prices rose while Bitcoin traded down during these events, indicating a negative correlation between the two assets.

Willy Woo, an analyst, further mentioned that Bitcoin typically recovers within days during geopolitical events, citing the Russia-Ukraine war as an example. Elliott concluded that Bitcoin is not a reliable store of value from a geopolitical perspective and suggested that its broader use may align it with other financial assets. At the time of writing, Bitcoin had begun its recovery from the weekend dip, reaching a value of over $65,800 in early trading on Monday, April 15.

3 thoughts on “PAXG Soars Amid Middle East Tensions, Bitcoin in Question

  1. The rise of illiquid gold token PAXG does raise concerns about Bitcoin’s ability to hedge geopolitical risks. It’s a valid point that shouldn’t be dismissed. 🤔

  2. PAXG’s performance during the recent events highlights its potential as a valuable asset. It’s definitely worth keeping an eye on.

  3. The fact that PAXG’s momentum couldn’t be sustained is concerning. It shows a lack of confidence in the asset.

Leave a Reply

Copyright © All rights reserved.