coinputin.com – Bitcoin has gained 3 times against Gold the price of Bitcoin has more than tripled against gold since the market meltdown last month. The Coronavirus outbreak and a massive influx of institutional investors have given cryptocurrency a major boost, experts say. Bitcoin adoption has gained “parabolic momentum” today.
Since March Sunday’s Coronavirus outbreak catalyzed a global market meltdown, the price of Bitcoin compared to gold has not only rebounded, but more than tripled, according to some charting platforms such as XE.
It shows that “digital gold” is now decidedly outperforming the traditional. But that’s the case, why is that?
Is Bitcoin directly comparable to Gold?
Bitcoin exchange CEX.IO Konstantin Anissimov, managing director of Bitcoin, said it was not correct to compare the market performance of Bitcoin and gold only in terms of price movements. March March march February 19, for example, Bitcoin lost 58.4%, while gold fell only 14.6% between March 9 and March 20.
But if we look at the price movement of both assets since the beginning of 2020, we will see Bitcoin grow by 450% and gold by only 50%. So we can certainly say that in terms of percentage growth, Bitcoin is a much more successful asset than gold during the year.
He added that one of the reasons behind such a drastic growth was the second wave of the Coronavirus outbreak. Since the resurgence of global quarantines in October, Bitcoin has increasingly begun to attract more traditional investors and high-net-worth market participants as a hedge asset and a means of protection against inflation, Anissimov said.
Earlier this week, Raoul Pal, CEO of financial TV channel Real Vision, decided to change his portfolio, which is divided between USD, gold and Bitcoin, taking Bitcoin and Ethereum with all the gold assets.
“I’m a macro investor, so I’m looking for the best return adjusted for risk, and Bitcoin was basically ahead of all other assets. And I kept the gold as long as I could, what’s the point?”
Institutional Investors Flock
That sentiment was restated by Lucas Huang, director of growth at the decentralized exchange Tokenlon. He said the main reason for the surge in institutional investor interest was that Bitcoin was far outperforming gold. Especially because it has many properties similar to precious metal.
Institutional investors have noticed that Bitcoin has similar characteristics to gold, such as limited supply. But emerging as a new and mostly speculative asset, Bitcoin has come quite a long way and will become more entrenched in 2020. The more ‘traditional’ investors buy, the more entrenched Bitcoin becomes.
Many institutional investors have increasingly entered the Bitcoin markets in recent months. This growth can be seen from the amount of Bitcoin held by digital currency asset manager Grayscale, whose clients are largely composed of institutions. Antoni Trenchev, managing partner of Nexo, said::
“As I have said over and over again, we should thank the other clever people in the room-the world’s Drunckenmillers – for Bitcoin’s performance, which was excellent compared to gold. Even “Ray Dalios”, who began to admit that they had missed something about BTC, contributed.”
Lior Messika, founder and Managing Partner of Eden block, a European blockchain-focused venture fund, highlighted the positive impact the worldwide epidemic and global economic woes have had on Bitcoin in 2020.
“Gold has long been a core strategic asset in the allocation of institutional investors and is generally used for portfolio risk hedging across the board. In the current situation, where the American economy is severely weakened by the COVID-19 health crisis and has reached about 22% of all USD printed in a single year, assets such as gold and, more importantly, Bitcoin have dramatically increased their value.
He added that while both gold and Bitcoin share the same trajectory, “Bitcoin’s tremendous performance is largely due to its improvement and relatively lower market capitalization.”
So as more investors realize that Bitcoin’s gold-like properties, such as portability, barterability, scarcity and divisibility, do not depend on physicality or central parties, “the expansionary nature of the movement is gaining parabolic momentum.”
As global faith in centralised economies continues to wane and the need for hedging becomes more pronounced, I expect Bitcoin’s price movements to become similar to that of gold,” Messika said.
“All things considered, Bitcoin has never been in a better position to be a true global Sunday.”