Key facts:
Both gold and bitcoin have merits as stores of value and investment.
Bitcoin emerges as a modern alternative, with great growth potential.
In the midst of the uncertain economic outlook that has characterized 2024, investors have been observing how they make their choices between two important assets: gold and bitcoin (BTC).
In a kind of fight between the traditional and the modern, both assets are currently in a close race to keep your place as an investment alternative and reserve of value.
In that sense, 2024 started busy for both BTC and gold. Both instruments surpassed their all-time highs, one driven by spot ETFs and halving; and gold due to negative expectations about the US economy.
And although many analysts consider that both assets are “incomparable” – seeing bitcoin as a risk asset and gold as a traditional safe haven asset, with proven value over the centuries – there are those who have observed that In recent times, points of convergence have emerged that put them in direct competition.
This issue has been widely evaluated by the investment bank Goldman Sachs, ensuring from 2022 that the most famous cryptocurrency in the world could reach 50% of the market reserve of value in the next five years.
According to data from the financial giant, BTC owns 20% of the current reserve of value market, a percentage that – in his opinion – will continue to increase rapidly given the growing adoption of digital assets among individual and mainly institutional investors.
“In a hypothetical scenario in which bitcoin reaches 50% of this market, its price would rise to just over $100,000,” Goldman analysts said.
This is also what Iñaki Apezteguia, Chief Research Officer of Crossing Capital, thinks, for whom the gap in market capitalization between gold and bitcoin will shrink over time, although he does not believe that will happen. in the short term.
But beyond the differences in market capitalization, performance is another aspect that is attracting attention and that puts the competition between the two assets “head to head.”
Although the precious metal has seen a appreciation of approximately 30% in the last 12 months, mainly driven by a notable increase in purchasing by central banks, bitcoin stands out by having recorded a return of more than 122% in the same period.
This performance has allowed BTC to rank among the 7 best assets of 2024. According to the statistics of the Investors Club by Carta Financiera, this year, the currency created by Satoshi Nakamoto, has had a return of 24%, leading the ranking despite its high volatility. In this way, bitcoin ranks above gold.
“The growing institutional adoption and the entry of large investment funds into the cryptocurrency market have helped boost its price,” the Club recalls in a recent report.
Gold occupies second place on the list, “demonstrating its great fundamentals: safe haven asset, good performance in the face of falling rates, record demand from central banks, and low correlation with the rest of traditional assets.”
In this regard, investment advisor Gastón Lentini explains that the operators who want these two assets “are very different”:
Although gold has a point in common with bitcoin, the countries that have BTC do not place huge assets in this market, with the exception of El Salvador. Countries are not seeking refuge precisely in cryptocurrencies, but in more conservative assets such as gold.
Bitcoin and gold stand out as “hard money”
At this point, it is worth noting that the debate on the role of BTC as a strategic reserve for countries is open. It goes beyond its intrinsic volatility considering its capacity long-term revaluation.
This is a capacity that gold It has already been more than provenbeing the reason why it stands as the traditional store of value asset. This stability makes it a preferred option in times of economic uncertainty, offering protection against inflation and the devaluation of fiat currencies, says a study by Brazilian fintech Bipa.
However, many of gold’s natural characteristics that have earned it its place can be replicated by a more modern asset like bitcoin. The digital currency has become an asset resistant to the passage of time like gold and capable of being useful in space. Hence its qualification as “digital gold”.
In this way, “the liquidity of gold, although robust, is not compared to that of digital assets such as bitcoin,” explained Bipa’s director of content and research, Caio Leta. Additionally, the need for physical storage and the risk of theft or loss are inherent challenges to investing in precious metals, he added.
Even so, both assets have similar characteristics and meet the premises to be a store of value and to be considered “hard money”, one that can hardly be counterfeited. All this, because their essential differences derive from the intangibility of one (BTC) and the tangibility of the other (gold).
As CriptoNoticias has reported, it is these properties of bitcoin and gold that explain the interest they arouse among investors. Above all, taking into account the development of the most commonly accepted fiat currency as a reserve of value: the dollar, which has been losing purchasing power by more than 95% from the beginning of the 20th century to the present.
