If there has been an event in recent years that has shown us the fragility of the human race, this has been the coronavirus. Despite not being as deadly as other contagious diseases. The unfortunate advance of the virus has shown how little prepared humanity is to face a challenge of this kind. Both in the health sector and in the economic sector, where investors have resorted to valuable reserve assets such as gold and Bitcoin.
First option: Gold
One of the worst effects that the coronavirus has had has been its impact on the global economy. Due to the rapid expansion of the virus in the Asian continent, dozens of companies have had to close their doors during the state of emergency. Affecting global supply chains, and therefore damaging the world economy.
This situation led to the biggest decline of recent times in the New York Stock Exchange. Which, although it has been able to recover in the last hours, continues being threatened against the advance of the virus, and with it of the economic paralysis.
This leads to investors having to resort to value reserve assets to protect their capital. That is, assets whose value is not directly related to the world market. So, when it falls, the value of these assets not only remains, but increases. Being perfect shelters for investors in the world.
And, among the value reserve assets, gold occupies a special place as it is the traditional refuge for investors in times of uncertainty. Thus, if we consider January 1 as a starting point to measure the impact of coronavirus on gold (the first outbreaks having been identified at the end of December), we can see a significant increase in the price of this precious metal.
Thus, by January 1, 2020, gold was listed on the order of $ 49,000 per kilogram. Shooting on January 6 to $ 50,534 per kilogram, hovering between $ 49,500 and $ 50,900. This trend continued until February 17, when the acceleration in the expansion of the coronavirus led gold to jump to $ 53,768 per kilogram on February 24. From where it went back, once the initial euphoria passed, to the 51,411 dollars in which it is currently listed. Accumulating since 4.92% of earnings.
Second option: Bitcoin
However, gold is not only among the options available to investors to protect their capital. Thus, there is another active reserve of value in dispute: Bitcoin. And it is that, the world’s first cryptocurrency, has already proven on other occasions to be an important refuge for capitals in times of economic, political and social uncertainty.
Thus, in the face of events such as the bombing of refineries in Saudi Arabia or the increase in commercial tensions between the United States and China. Bitcoin increased its price, as investors decided to invest in the cryptocurrency, increasing their demand, and therefore, its price.
The coronavirus outbreak would not have been an exception for this trend. Well, if Bitcoin started the year trading at $ 7,174 for BTC, it soon began an ascending race that positioned it at $ 10,367 for February 14. However, contrary to gold, the price of cryptocurrency began to decline since then, first slowly, and then sharply since February 23. Starting recently a recovery that has positioned it at $ 8,868 per BTC, a 23.61% gain.
Thus, it is clear that investors worldwide have sufficient options to protect their value, in times of uncertainty such as those generated by the coronavirus. Gold and Bitcoin being both valid options to place their capital, in case a derailment occurs in the global economy.
However, one must be aware that each asset has its own characteristics. Thus, Bitcoin is characterized by greater strength in its variations, which allows it to accumulate a 23.61% gain so far this year. But it also imposes constant surveillance of the crypto market to those who invest in the cryptocurrency, in order to act in case the bullish rally or the stability achieved by BTC reaches an end.
On the other hand, gold turns out to be an active reserve of value of great confidence and stability. Leaving aside the shocks that could be had by investing in cryptocurrencies like Bitcoin. But obtaining in return lower returns on investment, such as 4.92% that has accumulated since January, lower than the BTC gain. Leaving, therefore, the decision on which asset to invest in, the characteristics and objectives of each investor.