There has been a significant rally in the prices of both gold and Bitcoins in recent days. Bitcoin has crossed the mark of $11,000 for the first time in 15 months. Similarly, the price of gold is on a constant rise and it is currently trading at 6 years high record. However, the percentage gain in both the counters is significantly different. Bitcoin has soared more than 190% so far in 2019. There are multiple factors working behind the constant rally in the prices of Bitcoins and gold. Does Bitcoin excel over gold as a store of value?
Bitcoin better than Gold?
The recent days have been extremely good for the commodity market and for Bitcoins particularly. Bitcoin is considered to be the king of cryptocurrency and it is surely one because of the extended rally which is taking a parabolic shape. There are various factors working behind this increase in price.
There have been a lot of concerns over the trade war and geopolitical issues. Us China trade war, Hong Kong protest and some other economic concerns like slowing economy have had a Deep Impact. The world fears another phase of recession. This has led to a fearful situation where the investors are pulling out of the conventional investment markets like the stock market and mutual funds.
The money which is coming out of the market is being pumped into safe for asset class like gold. Similarly, there has been speculation in the cryptocurrency sphere with the announcement of Facebook Libra. Analysts how is suggested that the steep increase in the prices of Bitcoin shows that it is becoming a store of value. However, the risk remains high compared to other asset class like gold.
Gold is up 10% this year to hit a 6-year high record. But is it really prove that Bitcoin excels over the gold to be a store of value? Well, Bitcoin purely has a monetary value only, whereas, gold has an industrial demand as well in addition to the store of wealth. There has been a lot of debate between the prices of gold and Bitcoins and which one is a better store of value. Different research analysts have a different opinion and this can be seen from the tweet given below.
The vast majority of gold's price is monetary premium, just like Bitcoin.
Industrial use does not protect that premium in any way. The premium is based on suitability as a store of value where Bitcoin excels over even gold. pic.twitter.com/LXngwYxvDN
— Vijay Boyapati (@real_vijay) June 23, 2019
Bitcoin in a Parabolic Mood?
According to the most analyst, the prices of Bitcoin is still in a comfortable range. The really has just started and it seems that Bitcoin is preparing for its fourth parabolic move. The prices have crashed more than 85% since December 2017. It seems that now we are on a recovery path and more than 190% of side move has been seen so far in 2019 itself. Hence, we have nearly recovered 50% of the losses that were made during the crash
The rising concern of the economic recession and slowdown and major markets like China and other Asian countries have a red alarm ringing for the markets. The stock market and the debt market is unable to which time did the pressure been created because of these issues. Analysts believe that the medium-outlook look for the world economy doesn’t look very good.
We do not expect any solution for the trade war in the near term and the increase in chances of a war between the United States and Iran also raises concern. Hence, the prices of safe assets live gold and Bitcoin will only go up with the rising tensions in the economy. The only factors that Bitcoins can give you a huge return in the near term but it can be a risky bet as it doesn’t have any industrial value as such. Hence, it all depends upon the risk appetite of the investor.