- Gold is at an all-time low compared with Bitcoin. However, this cryptocurrency isn’t likely to slow down anytime soon.
- Investors opine that Bitcoin is more of a digital gold than a currency.
- Using various yardsticks to compare Bitcoin and gold shows that Bitcoin is more valuable than gold.
While Bitcoin price surges past the $50,000 price point, gold (the precious metal that’s usually the standard base of comparison) sits at its lowest point.
Gold ETFs cannot attract new funds, whereas there have been constant substantial inflows to BTC.
The Gold/Bitcoin Ratio is Currently at Its Lowest Ebb.
Amongst other comparisons, Bitcoin is usually compared with gold because both are assets traditionally associated with a store of value.
However, in the last year, gold’s price has been suffering compared to Bitcoin price.
Gold/Bitcoin ratio. Source: Bloomberg
The chart above shows that the gold/Bitcoin price ratio has declined since March 2020.
That drop in Bitcoin’s US value to about $3,800 (a 1-year low) resulted from the impending COVID-19 pandemic. After that time, the Bitcoin price has been on the increase. From that march 2020 period, this cryptocurrency has experienced an astronomical rise in price by about 1250%.
Conversely, gold has been lagging. Right now, one gold ounce is valued at $1780; this precious metal can’t seem to break the $2,000 price limit for that market; never mind providing similar gains like that of Bitcoin.
More Support for The Digital Gold Narrative
Though gold and Bitcoin have the features to be described as a store of value, most people believe that Bitcoin is more of a store of value than gold.
However, it is crucial to keep in mind that this comparison isn’t time-tested yet since the physical currency is much older than its digital counterpart. Records show that the first time gold was used was over 2,000 years ago.
Yet, prominent investors and many companies are starting to believe that Bitcoin is the next gold in digital format. Some even believe that it is more than just a currency.
According to Paul Tudor Jones, a legendary investor, “Bitcoin is the best inflation trade.” yesterday, James Bullard said he believes Bitcoin is now gold’s main rival as it has surpassed the role of just being a currency.
James Bullard is the current president for the federal reserve bank of St. Louis.
A Quick Comparison Between Bitcoin and Gold
First, Bitcoin is easily transportable; once you can access the internet, you can access your Bitcoins. On the contrary, it is a shedload of work transporting 10 kg of gold, let alone a ton of it.
Also, it is easier to keep Bitcoin safely. You won’t require any safe boxes or highly secured wallets.
Your wallet safely secures your Bitcoins, and you can be sure that you can’t be compromised so long you don’t reveal your private keys.
Lastly, Bitcoin is verifiably scarce, can’t be censored, and it’s digital. Our world is tilting towards digitization faster than can be imagined. Hence, these yardsticks are likely to favor this cryptocurrency than gold.