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With the recent Corona Virus scare spreading across the world and the drop in markets this week, people are once again looking at gold versus bitcoin.
For a few years, many people have been contemplating if bitcoin is a new digital gold? Is it a store of value like gold has been? Is it a safe haven asset and will it perform like gold if the markets go down?
There have been comparisons made over the past few years by people trying to match the price movement of bitcoin against the stock market. Sometimes it appears that the market drops and bitcoin goes up, other times we see the reverse. There does not appear to be a correlation yet though, as it sometimes has matched the markets and other times it has not.
In January bitcoin started a run up. Some pointed to the tensions in Iran for that. Then it continued climbing as the Coronavirus news hit China and many assumed that the Chinese were putting money there. A few weeks later it dropped when the market sold off over one thousand points in a day. So when the markets really started to drop so did bitcoin. Sometimes as the market rises, so does bitcoin, even as gold drops.
So there does not appear to be a direct bitcoin relation to the stock markets, as there is with gold. We know that most of the time, gold acts as a safe haven, and as markets go down, or things get scary, gold will go up. This is because of gold’s long history as something of value to people around the world. We have always looked at gold as something with a limited supply, that we trade, wear, and put in bank vaults.
Some argue that Bitcoin, and crypto, will take over as the new gold. A digital gold, so to speak, that is valuable to younger people who understand and speak the language of tech. Bitcoin has a limited supply, you can trade it, sell it, store it, and more. But many traditional gold bulls and economists will tell you that in no way it is like gold. The main reason is usually its price volatility, as well as how it sometimes drops along with the stock market instead of going higher like gold.
For example, Peter Schiff, is a well known gold bull. When the market went down on Monday so did bitcoin and Schiff jumped on that fact on Twitter.
Bitcoin promoters claim #Bitcoin has proven itself to be superior to #gold as a safe haven and store of value. This is nonsense. Bitcoin hasn’t been around long enough to prove anything other than P.T Barnum right. There’s a sucker born every minute and many of them own Bitcoin.
— Peter Schiff (@PeterSchiff) February 25, 2020
It should be noted that Schiff actually owns bitcoin, or did at one point. Now what is interesting here is that on the same day, Anthony Pompliano, also known as Pomp, went on CNN and talked about bitcoin being more of a non correrlated asset that could be a safe haven but not tied to gold or that traditional markets. Basically he was staying away from the bitcoin is the new gold statement. Instead, he pointed out that you don’t know what bitcoin might do during any market. Which is true so far, as I was saying earlier, sometimes it goes in the same direction, or sometimes it goes all over the place, you just don’t know. You can watch the segment with Pomp on the embedded tweet below.
“I don’t really take technology advice from someone who uses a flip phone or doesn’t use email,” punchy as ever @APompliano of Morgan Creek Capital on @firstmove tackling Warren Buffett, $BTC utility value and the high energy intensity of $BTC mining. pic.twitter.com/SZw8NinHF5
— Julia Chatterley (@jchatterleyCNN) February 25, 2020
Of course we know that neither bitcoin nor the crypto market, are anywhere near the multitrillion-dollar value levels of gold, bonds, and stocks. Bitcoin is only ten years old, and let’s face it. most people never heard of it until two years ago. If you are an Investor and looking for stable assets, then you would clearly be better served to put your money into any of the three larger and established asset classes. However, if you are the type that believes in taking chances, or have some sort of gut feeling that this Bitcoin thing will be around awhile, then you might want to add bitcoin or other crypto, to your portfolio.
Also you should consider gold, I own gold and silver in my portfolio, along with crypto, bitcoin, stocks and bonds. Consider your options, risk tolerance, and how you think things might play out, and then make your own decision on bitcoin vs gold.