{"id":3040,"date":"2020-12-17T08:38:56","date_gmt":"2020-12-17T08:38:56","guid":{"rendered":"https:\/\/timestampmag.com\/?p=3040"},"modified":"2021-09-08T09:39:34","modified_gmt":"2021-09-08T09:39:34","slug":"the-gold-to-bitcoin-trade","status":"publish","type":"post","link":"https:\/\/timestampmag.com\/2020\/12\/17\/the-gold-to-bitcoin-trade\/","title":{"rendered":"The Gold to Bitcoin Trade"},"content":{"rendered":"
This year and most recently, Bitcoin has made several headlines in mainstream media as the largest crypto asset rallies to set a new all-time high. Despite the <\/span>March 12 global market sell-off<\/span> which saw Bitcoin lost over half of its value, trading around the $3k neighborhood, the digital asset has had a legendary run for the rest of the year. <\/span><\/p>\n <\/p>\n Image Source:<\/i><\/b> U.Today<\/span><\/i><\/p>\n This year and most recently, Bitcoin has made several headlines in mainstream media as the largest crypto asset rallies to set a new all-time high. Despite the <\/span>March 12 global market sell-off<\/span> which saw Bitcoin lost over half of its value, trading around the $3k neighborhood, the digital asset has had a legendary run for the rest of the year.\u00a0<\/span><\/p>\n Since the Coronavirus-induced sell-off in March, Bitcoin has surged more than 4 times its price to reach an all-time high of $20830, moving aggressively too(<\/span>Binance rate<\/span>). This legendary move amidst the dwindling world economy, rising global debt, and dollar devaluation has gained the noble asset some great interest among high-profile financial players. This has also increased the tussle between Bitcoin Vs. Credit Card<\/em><\/strong><\/a>.<\/span><\/span><\/p>\n This has further upheld the <\/span>Bitcoin<\/span> narrative of a \u201cstore of value\u201d and purported \u201cdigital gold.\u201d Amid this run, many Bitcoin proponents and big names have taken to the center stage to compare Bitcoin and Gold fundamentals, with a notion that investors are likely selling off their Gold for Bitcoin.<\/span><\/p>\n Compared to Bitcoin, Gold hasn\u2019t made great moves this year, although the precious metal is still in the green <\/span>with about<\/span> 21% gains year-to-date (YTD). This could be considered as some decent gains, however, it looks unattractive when compared to Bitcoin which <\/span>has done almost<\/span> 170% YTD.\u00a0<\/span><\/p>\n Commenting on how attractive Bitcoin has become, <\/span>CEO of business analytic firm MicroStrategy Michael Saylor, who recently led his firm to make one of the biggest Bitcoin purchases in 2020 <\/span>believes that<\/span> gold is outdated and uninventive. He pointed out that investors buy it as a habitual store of value.\u00a0<\/span><\/p>\n Saylor further insisted that investors will likely dump it for a more superior store of value in the future in the face of an evolving economic and technological age.<\/span><\/p>\n <\/p>\n Image source:<\/i><\/b> GraphicRiver<\/span><\/i><\/p>\n While Bitcoin was having a legendary run, tons of gold has been taken off ETFs, revealing a striking correlation between the duo while supporting the assertion that investors are likely selling off their gold for Bitcoin. Gold prices have maintained a steep downtrend since August when Bitcoin started the legendary run from $10k to the $20k region. The Bitcoin halving effect<\/strong><\/a><\/em> also plays a crucial role.<\/span><\/span><\/p>\n As noted by an analyst at JPMorgan Chase & Co., family offices and other funds are selling off their gold exchange-traded funds (ETFs) for crypto with gold-backed ETFs dropping 93 tons of metal, which is valued at $5 billion since Nov. 6.\u00a0<\/span><\/p>\n With the recent performance, the notion of Bitcoin being a hedge against inflation, and the incessant printing of trillions of fiat currencies is being revisited. A close study conducted by Trustnodes in 2018 <\/span>found out that<\/span> substituting gold for Bitcoin has a higher chance of providing risk-adjusted returns.\u00a0<\/span><\/p>\n \u201cWe find that it is possible for an investor to substitute bitcoin for gold in an investment portfolio and achieve a higher risk adjusted return\u2026 These results are robust to the inclusion of trading costs.\u201d<\/span><\/i><\/p>\n Further studies have also revealed that bitcoin is a hedge against geopolitical risk and that the continued devaluation of the dollar and euro has a positive effect on the value of the <\/span>digital asset<\/span>.\u00a0<\/span><\/p>\nSeasoned Investors Are Shifting Focus From Gold To Bitcoin<\/b><\/h2>\n