Amid international crises and a shaky cryptocurrency market, debates continue over what role Bitcoin really serves as an investment. Is it digital gold or just another risky asset?

In a recent tweet, Ki Young Ju – CEO of cryptocurrency market analysis firm CryptoQuant – opined on the matter. He believes that as long as institutions like MicroStrategy continue to buy Bitcoin, the asset’s “digital gold” narrative will continue to apply.

Knowing the fundamentals of Bitcoin

Ju offered your thoughts in response to a wire by FTX CEO Sam Bankman Fried (SBF) earlier today. The billionaire exchange’s owner has given a personal analysis on how Russia’s recent invasion of Ukraine is affecting cryptocurrency prices and why.

After the hack made headlines yesterday, the price of Bitcoin dropped below $35K before rebounding to approximately $36K at the time of writing.

Going by the “fundamentals” of Bitcoin, SBF predicted that Bitcoin should not have moved drastically in either direction. Theoretically, while the war can incite people to withdraw their money from the asset and in cash, it can also encourage people to move away from weak European currencies and into harder currencies.

Due to Bitcoin’s limited supply of 21 million coins, some see the cryptocurrency as the hardest currency on Earth capable of replacing the dollar. Its production difficulty mimics that of gold, earning it the nickname “digital gold”.

In this context, SBF explains Bitcoin’s recent drop as being spurred on by “algorithm followers” ​​rather than “fundamental investors”. He argued that the push-pull dynamics between these groups caused Bitcoin to drop by exactly 8% on the day.

Follow MicroStrategy, says Ju

That’s where the CEO of CryptoQuant entered the conversation. He confirmed that there was no “significant on-chain activity” in response to the war, suggesting that SBF’s thesis on fundamental investors was correct.

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“Institutions that bought $BTC via on-chain txns seem [to have] has not yet sold its holdings,” said Ju. “Institutions that run algorithmic trading bots think that BTC is a technology stock.”

The CEO concluded that he would prefer to be exposed to Bitcoin until Michael Saylor – CEO of MicroStrategy – sells any of his own. “The digital gold narrative is still valid as long as these institutions hold Bitcoins,” he said.

Saylor’s company is one of the largest individual Bitcoin holders, reportedly owning over 125,000 coins as of February. The CEO has repeatedly referred to the asset as “digital gold” and recently said Bloomberg that he would never sell his holdings.

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