“Bitcoin is the new digital gold.” How many times have we heard this? Surely more than we remember. The theory: Bitcoin would behave as a safe haven asset, a digital one, in times of trouble. When a recession came, everyone was going to want one.
Many people hoped that Bitcoin (BTC) would not fall so soon and remain close to 10,000 USD. Something like he did immediately after the assassination of the Iranian official Qassem Soleimani by the United States, writes Steven Ehrlich in Forbes.
Recently it has come back down. After reaching a recent high of nearly $ 10,500 two weeks ago, the price of Bitcoin has plummeted like the rest of the world’s stock markets.
The comparison between Bitcoin and gold is not necessarily nonsense
Gold has more value than most precious metals due to its relative shortage and acquisition difficulty. And Bitcoin has been designed to be scarce and difficult to acquire. The biggest difference between the two is the high historical volatility of Bitcoin.
“We have to remember that Bitcoin is still a small market capitalization instrument and that there will be high short-term volatility,” says Catherine Yushina, a member of Sky Capital Management in San Francisco. “We should focus on the long-term vision and look at the history of Bitcoin prices,” he says.
To this he added that the important thing is to focus on the long-term vision, and analyze the history of Bitcoin, since it has generally been on the rise. He also talked about the prospects of price increases for May 2020 due to the halving of BTC.
How has the relationship between Bitcoin and gold been?
Bitcoin has shown a degree of correlation with gold and other safe haven assets in the past, but the narrative that Bitcoin is a perfect substitute for gold is not as frequent as some believe.
In addition, although Satoshi Nakamoto’s cryptocurrency has some characteristics that compare favorably with gold, for many people with low risk tolerance who seek to protect their wealth above all else, it is still too volatile.
And this is precisely the point of difference between those who support or not this claim that Bitcoin is digital gold: how much volatility is enough to decide whether it is a safe asset or not? Those who say that Bitcoin is too volatile to be compared to gold could have arguments in their favor, but that does not imply that historically this cryptocurrency has grown in valuation.
What do investors think?
Bitcoin is beginning to behave slowly like gold, says Yushina. “He is on his way to living up to his digital gold title.”
It is also valid to remember that one thing is price and another valuation. The price can certainly vary and be volatile, but that does not prevent Bitcoin from disrupting economies to remain a valuable asset.
If not ask Venezuelans. In Venezuela right now, BTC is absolutely the new gold. In addition, in CriptoTendencia we are advocates of the idea of adopting a multiannual vision on the speculation of BTC.
In addition, BTC is the best performing asset of 2019. It surpassed the S&P 500 even though last year was not the best year for Bitcoin earnings. If we go to the short term, since January the profits of this cryptocurrency so far this year are good, around $ 2,000 since January.
However, the debate in this regard is always valid. The idea is not simply to impose ideas, but neither seeks to maximize the arguments of either party, whether they are cryptocurrency advocates or not. Meanwhile, at the time of writing this BTC publication is located at 8,737.18 USD, which represents a 0.02% drop in the last 24 hours.