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As news that it would be President Donald Trump residing in the White House come January, the value of the dollar plummeted. As traditional currencies faltered and reconfigured, the value of both Bitcoin and gold began to rise.
Dollar Index: -2%
— Charlie Bilello, CMT (@MktOutperform) November 9, 2016
In times of market volatility or political uncertainty, some investors shift from risky investments and invest in gold. Traditionally, gold is considered counter-cyclical and inherently valuable. An asset like gold that defies uncertainty becomes a safe place in which to store your wealth. When Trump was elected, gold spiked 4 percent in value reflecting that.
Screenshot via CoinDesk BPI Chart
When Bitcoin is exhibiting the same behavior as gold, it can be considered good news for the cryptocurrency. It basically means that trust in Bitcoin is growing and, building that counter-cyclical reputation, it is largely considered a good currency in which to hedge money.
Bitcoin has performed this way during two macroeconomic events this year: Brexit and the U.S election. Broadly, they perform similarly.
The experts aren’t convinced yet though, with Tim Enneking of cryptocurrency investment firm EAM telling Coindesk recently, “There is actually very little correlation when you factor out geopolitical events that drove prices for everything up or down.”
As expected, Bitcoin prices started to return to normal levels as the markets stabilized and as Trump delivered his acceptance speech. In the long run, though, it looks like Bitcoin may be become quite literally ‘digital gold,’ a safe bet investment for future crises.
David Gilmour is a reporter who specializes in national politics, internet culture, and technology.