Cryptheory – Just Crypto

Cryptocurrencies are our life! Get an Overview of Market News

Goldman Sachs Commodities Chief Calls BTC ‘Digital Copper’

2 min read

Goldman Sachs Commodities Chief Calls BTC ‘Digital Copper’

Despite the popularity of BTC’s “digital gold” narrative, cryptocurrencies share more with a much different kind of metal, argued Jeff Currie, the head of commodities at Goldman Sachs.

“Digital currencies [are] not substitutes to gold. If anything, they may be a substitute to copper. And the reason I argue that is they’re pro-risk, they’re risk-on assets,” Currie said during an interview with CNBC yesterday.

The terms “risk-on” and “risk-off” refer to various economic environments and the corresponding investment strategies employed by traders. In a risk-on environment, the outlook is usually positive, markets are in an uptrend, and corporate earnings are surging. 

This prompts traders to get involved with more risky assets in an attempt to earn more profits. Stocks are a prime example of a risk-on asset.

However, when there is an economic downturn, traders tend to dump their risk-on assets in favor of safer risk-off investments, which are better suited for preserving their capital. Cash and gold are examples of this style of investment.

In other words, when everything is good and growing, investors take more risks by betting on riskier assets, and when the market is seeing red, traders flee to more stable assets.

As for the precious metals comparison, copper is often considered a “third-rate” metal throughout its history compared to gold and silver. However, the metal’s lower price—gold and silver cost roughly 475 times and 7 times more than copper, respectively—and larger supply make copper a much more volatile asset.

“[Bitcoin’s] demand is through payment systems. It’s going to be correlated to the business cycle. So, when we look at the substitute, if anything, we would argue that BTC substitutes against risk-on inflation hedges, not risk-off inflation hedges,” Currie explained.

BTC and gold de-correlate

A report published by institutional digital assets data provider Kaiko Research on Monday also corroborates Currie’s remarks. 

According to the researchers, the correlation between BTC and gold has recently plunged to its lowest point since 2018.

“We can now observe a pre-pandemic trend between equities and gold setting in. Today, BTC’s correlation with both asset classes is either negative or weak,” Kaiko Research concluded.

A chart comparing correlations with various financial markets.
Correlation between the Nasdaq, S&P 500, Gold, and BTC. Source: Kaiko

While BTC is often compared to gold based on their qualities as stores of value, the market crash in 2020 made their correlation as strong as ever. 

Nevertheless, as markets recover and the pandemic slowly concludes, BTC and gold are gradually parting ways.


All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

Leave a Reply

Your email address will not be published. Required fields are marked *