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Many investors have dismissed the notion that bitcoin could be a type of digital gold since the cryptocurrency has been trading like a speculative risk asset for much of the past two years. But about 50 years ago, gold did the same thing, Morgan Stanley said in a recent note. If bitcoin's current moves continue to follow those of gold in the 1970s, the cryptocurrency could be in for some tough times ahead. In 1971, individuals could no longer convert U.S. dollars to a specified amount of gold. Since 2008, governments have become more reliant on central banks creating new fiat currency money that isn't backed by a commodity to provide support in times of crisis, according to Morgan Stanley's note. That's different from bitcoin, which has a limited supply. In the '70s, "gold was tracking the rising rate of consumer price inflation (CPI), which was largely a result of the recent explosion of fiat money supply," said Sheena Shah, a strategist at Morgan Stanley and a coauthor of the note. "Bitcoin, on a logarithmic scale, has so far followed a similar path to the price speculation of gold in the 1970s, which also seemed to follow a four year cycle." Starting in 1971, gold prices quadrupled within four years as the U.S. dollar money supply grew rapidly, the strategist said. "That wasn't the height of the speculation, however: from August 1976 to January 1980, the price of gold rose eightfold from $102 to $850." "As the gold price was still managed for the first few years, the similarities may be a statistical coincidence more likely, in our view, is that both were driven by similar speculation cycles," she added. Bitcoin fans have long highlighted its potential to act as a "digital gold" because it's divisible, scarce and doesn't rely on a central issuer. They also once argued that bitcoin offered a hedge against equities, but last year's market havoc threw cold water on that idea as the cryptocurrency's correlation with stocks hit an all-time high . At the end of March, that correlation fell to its lowest since 2021 , while bitcoin's correlation with gold has been climbing. After the Federal Reserve loosened monetary policy to support the economy at the start of the Covid pandemic, bitcoin outperformed gold 2.9x over the three-and-a-half-year period, Bernstein recently noted. This year, banking crisis fears in the U.S. helped push bitcoin to even greater gains. CNBC's Michael Bloom and Gabriel Cortes contributed reporting

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Bitcoin's chart has some eerie parallels to gold in the 1970s - CNBC