Bitcoin Vs Gold Debate Rages As BTC Hits A Year High
As more people come to the realisation that Bitcoin is a legitimate store of value, the price continues to grow. However, this unprecedented year keeps raising a familiar question: Bitcoin or Gold?
Bitcoin Price Peak
Bitcoin closed the day on Monday, August 17, 2020 at a price of $12,254 USD. This was a 3.01% increase in 24 hours of $358, not to mention the highest closing price in over a year. The value is keeping its head above the $12k USD barrier for now but is still 38% lower than its all-time high of $20,089 from December 17, 2017.
Gold is trying to find firm footing and sustain its $2,000 per ounce price level following a correction (triggered when the asset hit an all-time high of 2074.88 this month). While both alternative assets are skyrocketing as the dollar continues to dip, investors and would-be experts can’t seem to agree where people should put their money.
Bitcoin vs Gold
Why the debate? Well, in times of economic uncertainty, investors foresee a dip in the price of fiat currencies and throw their money into safe haven assets to protect their wealth. This is partly why Bitcoin was created in the first place – to protect the value of people’s money so that it couldn’t be devalued by governmental inflation.
Gold was always looked at as a safe haven asset, but Bitcoin is quickly taking up the mantle of “digital gold,” which is why the two are now constantly compared.
In a broad sense, JP Morgan has reported that younger investors generally put their faith in Bitcoin, while the older generations favour gold.
“The two cohorts show divergence in their preference for ‘alternative’ currencies. The older cohorts prefer gold while the younger cohorts prefer bitcoin.”
– JP Morgan analysts led by Nikolaos Panigirtzoglou wrote in August.
“The simultaneous flow support has caused a change in the correlation pattern between bitcoin and other asset classes, with a more positive correlation between bitcoin and gold but also between bitcoin and the dollar as U.S. millennials see bitcoin as an ‘alternative’ to the dollar.”
The Winklevoss Twins, huge Bitcoin proponents, have stated that the price of gold isn’t fixed due to the amount of it floating out in space. In their opinion, there’s a financial incentive for Elon Musk’s SpaceX to use their technology in mining billions of dollars’ worth of gold from asteroids, therefore devaluing its worth.
Mike Novogratz and Dave Portnoy have also come down on the side of Bitcoin. As Bloomberg states, the two investors differ in investment background, experience and viewpoint, but agree: buy Bitcoin. Novogratz considers Bitcoin “harder to buy” than gold, putting his money where his mouth is with 25% of his personal wealth tied up in the asset. Portnoy was apparently swayed by the Winklevoss’ comments on the future of gold vs bitcoin.
The Assets Are Now Linked
While many debate over one or the other, investors are now saying gold’s success will indirectly boost the price of Bitcoin, possibly to $50,000. This comes after Warren Buffet made a huge move to pull money out of banking and put it into a gold firm (not the asset itself).
Buffet’s firm, Berkshire Hathaway, sold a huge portion of its shares in JPMorgan Chase, Wells Fargo and PNG. Buffet purchased a single stock in Barrick Gold, a Canadian mining company. This move out of banking and into gold suggests a lack of faith in banks as a long-term investment. Avid Bitcoiner Max Keiser claims that such a titan moving into gold will correlate to a similar move into Bitcoin, buoying the price to $50,000. While this seems a little on the optimistic side, it worth considering.
As we reported recently, more and more big players are entering the crypto space, and buying Bitcoin. This is a sure sign of continued legitimacy and adoption of the digital asset as a store of value – a camp we’ve been keeping warm for quite a while.
Written by: Adam Farrell
Writer. Content marketing. A cloud-in-his head kind of guy. He loves to create and invent stuff. Good with words.