Comparing all the precious metals, gold has always been the most popular for investment, investors usually buy gold as a way of reducing risk during uncertain times on the markets and this is often using contracts and derivatives. In fact, as we see the value of the dollar fall against other currencies, the knock-on effect is that the price of gold raises substantially.
Bitcoin is similar to gold in that it is also a good investment during market volatility, according to the Department of Economics of the University of Pretoria, Bitcoin is the new digital gold with evidence from extreme price movements in financial markets. Their paper tests a popular claim in the media that Bitcoin has joined the ranks of safe-haven assets. These are assets where investors turn during uncertain financial times, leaving high-risk stocks and currencies.
An example of Bitcoin bucking the trend, towards the end of November 2020 there were two major news stories that shook the markets, one was the statement issued by President Trump on vaccine delivery and the other was the assassination of the Iranian nuclear scientist. These two stories shook the markets and created growing market volatility with both gold and silver heading downwards but the Bitcoins trend was upwards, adding substance to the sentiment that the new digital gold is a safer haven than the traditional gold.
Bitcoin as a digital gold will continue to go higher, more and more people are going to want to add it to their portfolio. Bitcoin is by far the biggest digital coin in circulation and with the biggest news of the year being PayPal’s decision to include Bitcoin it will only push all banks to catch up in the race to work with crypto products, the biggest companies like Visa, Mastercard and American Express will follow in the next year.
These companies will need to join in the Bitcoin revolution as it is becoming increasingly popular as a way to pay for online goods and services and as a trading alternative to traditional currencies especially during these volatile times, for instance, Bitcoin Era is an online platform where users can trade Bitcoins and these companies will want us to use them to fund our trading.
Bitcoin is by far the largest digital currency and it is on fire this year, some investors are frightened of missing out on what so far has been an incredible run, with a report by Citi citing that there’s still plenty of upsides to be had. Whilst many think that cryptocurrencies are turbulent, most would be surprised to learn it actually has favourable volatility statistics. The economist Ray Dalio has hinted that the debasement of the dollar and a paradigm shift in the global currency markets could happen. A report by CitiBank MD, and former FX technician, Tom Fitzpatrick, reveals an uber-bullish target in which the digital asset could vault to $318,000 in just over a year, we will see.
Bitcoin is not the new gold, simply because the old gold still works fine, whilst Bitcoin is a safe store during difficult financial times it’s still only short term whereas gold will always remain a long term safe store. If you think about it you cannot beat having a tangible asset, whatever happens, gold will always have value, you could trade it anywhere but unless you have a computer and internet connection Bitcoin is worthless.