Traders have watched as the flagship cryptocurrency Bitcoin crashed below a significant marker overnight, with analysts noting mass sell-offs.
The digital asset plummeted to US$86,284 – or $125,708 – on Monday morning, AEDT, a drop of about 3.2 per cent.
That, and downturns in the price of other major cryptocurrencies, saw US$315 million ($483 million) in liquidations over a four-hour period, CoinGlass data showed.
According to financial news site Crypto Crank, the US$88,000 threshold has historically acted as a trigger for liquidity – including automated sell orders – for Bitcoin traders.
Price trackers show Bitcoin crashed through that point about 5am, AEDT, before falling sharply down to the midUS$86,000 mark in a few hours.
Johns Hopkins Professor of Applied Economics Steve Hanke shared a graph on X comparing recent growth in gold prices to that of Bitcoin.
“BITCOIN = FOOL’S GOLD,” he wrote.
Other large cryptocurrencies Ethereum and Solana were also down 5.2 per cent and 7.09 per cent respectively on Monday morning.
Bitcoin reached highs of $188,000 in October – US$124,000 – before seeing a series of sharp declines in recent months.
CoinDesk reported Bitcoin’s value had dropped 6.6 per cent since US President Donald Trump threatened widespread tariffs as he attempted to strongarm Europe over his desire to control Greenland.
Meanwhile, gold prices had risen 8.6 per cent in the same period.
Bitcoin investment firm NYDIG’s Global Head of Research, Greg Cipolaro wrote on January 23 that the digital current tended to be used as an “ATM” during periods of panic.
“Under periods of stress and uncertainty, liquidity preference dominates, and this dynamic hurts bitcoin far more than gold,” Mr Cipolaro wrote in a blog post.
“Bitcoin is highly liquid and tradeable 24/7, making it one of the few assets that can be sold immediately when other markets are closed or impaired.
“Despite being liquid for its size, bitcoin remains more volatile and reflexively sold as leverage is unwound.
“As a result, in risk-off environments, it is frequently used to raise cash, reduce VAR, and de-risk portfolios regardless of its long-term narrative, while gold continues to function as a true liquidity sink.”
Mr Cipolaro wrote that despite Bitcoin making “meaningful inroads” with institutional investors in recent years, “it still falls short of gold in terms of broad acceptance within professional portfolios”.
“Gold excels in moments of immediate confidence loss, war risk, and fiat debasement that does not involve a full system break,” he wrote.
“Bitcoin, by contrast, is better suited to hedging long-run monetary and geopolitical disorder and slow-moving trust erosion that unfolds over years, not weeks.
“As long as markets believe the present risks are dangerous but not yet foundational, gold remains the preferred hedge.”
