Bitcoin and precious metals compete as alternative ways to protect wealth from government intervention and political uncertainty. However, recent events have demonstrated that Bitcoin is not a suitable alternative to precious metals. The cryptocurrency is simply too volatile and risky. Bitcoin has seen millions of dollars-worth of wealth evaporate following a series of headwinds in the month of March alone.
Bitcoin enthusiasts looked forward to the Winklevoss Brother's Bitcoin ETF (COIN). The ETF was expected to add legitimacy to the cryptocurrency and give retail investors a way to buy Bitcoin without having to entrust their money to the murky and uninsured Bitcoin wallets and exchanges. However, the SEC rejected COIN based on concerns about the potential for fraud and lack of regulation. A few weeks later the real nature of their animosity becomes clear as the U.S Internal Revenue Service (IRS) takes legal action against Coinbase, one of the largest Bitcoin wallets. The IRS filed new documents attempting to force Coinbase to turn over customer account information because of "wide-scale tax evasion." The price of Bitcoin has cratered in response to these headwinds.
Bitcoin is a risky and unstable asset under extreme political pressures. It is only a matter of time before government action against Bitcoin is successful, and the cryptocurrency should be avoided in light of these risks. There is no good alternative to precious metals when it comes to protecting wealth from political and economic uncertainty.