What To Know:
- Balaji Srinivasan said physical gold may no longer serve as a dependable hedge during a US dollar crisis, citing Bitcoin’s stronger resistance to seizure and centralized control.
- He pointed to historical precedents such as the 1933 US gold confiscation order and argued that digital assets reduce risks tied to physical custody.
- His comments came as gold and silver suffered sharp market corrections, renewing debate over traditional safe havens versus digital alternatives.
Former Coinbase CTO and angel investor Balaji Srinivasan has reignited debate over whether physical gold remains a reliable hedge during a potential US dollar crisis, and argued that Bitcoin offers stronger protection.
In recent comments, Srinivasan said warning signs of stress within fiat-based systems are becoming more visible. Even as gold has traditionally been viewed as protection during monetary instability, he warned that the metal carries historical and political vulnerabilities that investors often overlook.
Balaji On Gold vs Bitcoin
He pointed to the 1933 executive order under US President Franklin D. Roosevelt, which forced citizens to surrender privately held gold to the federal government. According to Srinivasan, that precedent highlights a risk that still exists when assets depend on physical custody.
Bitcoin, he argued, operates under different constraints.
Unlike gold bars stored in vaults, Bitcoin exists as digital bearer property. Its design allows it to be transferred across borders without intermediaries, while ownership can be maintained through cryptographic keys rather than centralized storage. Srinivasan described these features as offering stronger resistance to seizure during periods of sovereign stress.
He also highlighted global reserve trends following the 2008 financial crisis. Since that period, BRICS nations have steadily increased their gold holdings, reflecting a broader move away from dollar dependence and toward tangible reserve assets.
Yet Srinivasan believes that trend may have limits.
While Eastern economies have leaned toward physical commodities, he said the global financial system is being reshaped by the internet. In his view, digital networks may gradually replace dollar-centric monetary structures with programmable assets that operate beyond national control.
For countries facing rising sovereign debt, particularly across North America and Western Europe, Srinivasan suggested that gold may no longer provide full protection. He said Bitcoin deserves consideration as a hedge precisely because it does not rely on physical custody or state-controlled infrastructure.
His remarks came as precious metals markets saw one of their sharpest corrections in recent history. Meanwhile, Bitcoin is currently trading at $82,594.18.
Spot gold fell from an intraday high near $5,450 to a low around $4,944, wiping out an estimated $3.5 trillion in market value at its deepest point. The decline briefly exceeded the combined market capitalization of two Bitcoins, currently estimated at roughly $1.64 trillion.
Silver suffered even steeper losses.
Prices dropped from approximately $118 to $95.20 within the same trading session, erasing about $1.28 trillion in market value. That figure approached the total valuation of nearly four Ethereum networks combined, based on current market data.
The selloff followed weeks of aggressive upward momentum that had driven both metals to record territory.
Veteran trader and chart analyst Peter Brandt, known for accurately calling the 2018 Bitcoin market peak, had warned earlier this week about excessive speculation in silver markets.
On Wednesday, silver recorded a daily loss of 14.16 percent, ranking as its second-largest one-day decline on record. The only steeper fall occurred during the 1980 “Silver Thursday” collapse, when prices plunged more than 50 percent following the unraveling of the Hunt Brothers’ trading positions.
Brandt highlighted unusual activity on the COMEX exchange. Weekly silver trading volume reached 4.3 billion ounces, equal to more than five years of global production. He said the surge likely reflected miners locking in profits at elevated prices rather than genuine end-user demand.
Such hedging behavior, he noted, can rapidly increase available supply once prices peak.
The downturn spilled into equity-linked products across Asia.
Indian gold exchange-traded funds dropped as much as 9.06 percent in a single session, snapping months of near-vertical gains. Silver ETFs fell even more sharply, with losses reaching 11.47 percent, despite one-year returns that remain among the strongest in global markets.
Gold settled at $5,126.90, down 3.60 percent on the day. Silver closed at $106.99, declining 6.51 percent. Both contracts traded near session lows as selling accelerated.
The correction echoed warnings issued by Marko Kolanovic, the former JPMorgan head of global research who departed the bank in 2024.
In a post on X, Kolanovic said silver prices could fall by as much as 50 percent within a year. He argued that commodity rallies tend to unwind quickly once supply responds through recycling and increased production hedging.
Unlike purely digital assets, he noted, physical markets adjust fast when incentives shift.
Also Read: Bitcoin Slips After Brief Stability Amid US-Europe Trade Dispute
