In recent times, cryptocurrencies and gold have been enjoying attractive spikes due to certain factors. For cryptocurrencies, global interest has been significantly increasing. People no longer trust fiat currencies because their centralization has caused undesirable effects. For example, many countries have continued printing more money as stimulus checks or business bailouts because of the coronavirus pandemic. While this move is necessary as jobs and income have been lost, it has shown that other asset options without this much control might be needed.
Apart from cryptocurrencies, these factors also significantly benefit gold. While gold may not have the investment qualities that cryptocurrencies possess due to their volatility, it is an excellent store of value and has also been pumped by the pandemic.
Bitcoin was launched back in 2009 by Satoshi Nakamoto, a pseudonym that may belong to one person or a group of people. Regardless of this obscurity, people all over the world now recognize that the network is not only very secure but also provides exciting investment opportunities. Consequently, the inflow of funds into the market is high, especially with institutional investors. Notably, Tesla recently invested $1.5 billion into the Bitcoin market.
While Bitcoin is just about 12 years old, gold has been around for much longer. One of the rarest and most expensive metals in the world, gold has built more trust than Bitcoin as it is a lot more recognized. Just like Bitcoin, the coronavirus pandemic also pumped gold as people looked to move away from fiat currencies, hedging their funds in other assets.
Bitcoin is often referred to as the “digital gold”. One reason is that it has store-of-value properties like gold. Secondly, its longevity has put it at par with Bitcoin regarding investment or hedge choices from persons looking for fiat alternatives.
In the heat of the COVID-19’s first wave, both Bitcoin and gold pumped in response to the stimulus checks printed by the US Federal Reserve. As the US plans to print more money for the same purpose, there is a high likelihood that the Bitcoin and gold markets will enjoy direct pumps in the same way. As the pandemic persists and money is printed worldwide, both Bitcoin and gold may continue to spike.
The case for gold is its longevity and worldwide trust. Anyone can buy gold, store it in a vault, and wait for the price to pump. Inflows to the gold market have been consistent, even before the pandemic. Now, there’s even more reason to pump money into the market and push prices higher.
Bitcoin is a lot more volatile than gold. Without much notice, investors can double their capital or lose all of it in no time. While this is common knowledge, factors such as the pandemic and institutional investment have done more than enough for the sector, encouraging more people to focus more on the possibility of a bull market than that of a bear market. Bitcoin is also more versatile than gold, as it can easily be used to pay for goods and services. Several companies, including payment processing institutions, now allow Bitcoin payments along with fiat.
Choosing which one to go for may depend on several factors. These include the preferred investment time frame, the number of funds to deposit, and how much money you intend to invest. While you may read here more if undecided, consider that both assets might be worthy because of the rate of institutional investment, the coronavirus pandemic, and governments printing fiat.
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