Crypto is the canary in the financial coal mine
All the same, the ETF is still up over 70 percent last year, easily eclipsing the 39 percent rise in the United States.&P 500 index.
Cryptocurrencies have also been hit hard, with investors pulling out some of their riskiest bets.
Bitcoin – which is almost the ultimate in speculative assets – hit $ 65,000 last month. Since then, the price of virtual currency has fallen by almost 50%.
Investor confidence in bitcoin has been shaken by signs that US and Chinese regulators are preparing to crack down on digital currency.
Last week, the Chinese central bank warned financial institutions not to accept virtual currencies as a method of payment because they are not real currencies.
Adding to the pain, the Biden administration unveiled new proposals that would require cryptocurrency transfers over US $ 10,000 to be reported to US tax authorities as part of a broader crackdown on tax evasion. .
Repression of regulators
But before regulators even predicted a tougher crackdown on digital currencies, professional investors – who were beginning to show interest in bitcoin – were avoiding its extreme volatility.
Unsurprisingly, it was baffling for institutional investors to see mercurial Tesla boss Elon Musk treating bitcoin like a toy, the price of which he could send up or down with just one tweet.
While institutions might have applauded when Musk gave his support for bitcoin, they winced when he sparked a sale by tweeting earlier this month that Tesla would no longer accept bitcoin as payment for its electric vehicles. .
Despite the latest drop in the price of bitcoin, however, the digital currency is still around four times its level of a year ago.
But while the fine returns may compensate some investors for the extreme swings in the price of cryptocurrencies, some institutional investors have begun to despair of wild gyrations.
And this has led them to reduce their exposure to digital currencies, while increasing their exposure to a more traditional safe haven: gold.
As a result, as cryptocurrencies lost some of their appeal, the price of the precious metal rose.
The price of gold peaked last August above US $ 2,000 per troy ounce, before a surge in risk-taking pushed it down to US $ 1,686 in late March.
Since then, however, the price of the precious metal has gained over 10 percent, trading at just over US $ 1,880.