Bitcoin is outshining gold in the battle of the safe havens


As the price of bitcoin (BTC) approaches $59,000, its value against gold is approaching new record highs, perhaps indicating a new preferred store of value.

Measured against gold, the price of bitcoin reached 34.94 ounces on Tuesday. Comparable BTC gold reached its highest level on the 13th. A high of 35.35 ounces in March, when bitcoin climbed to more than $61,000.

Bitcoin continues to significantly outperform gold. | Chart via BuyBitcoinWorldwide

Bitcoin is outshining gold in the battle of the safe havens

The value of bitcoin against gold has more than doubled in the past three months, and has increased nearly sevenfold since October 2020.

Gold futures fell Tuesday to below $1,700 an ounce on the Comex, a division of the New York Mercantile Exchange. It closed at $1,676.50 an ounce, a new low in three weeks. Since peaking above $2,050 per ounce in August 2020, the gold price has corrected by nearly 18%.

The year 2020 was an important one for gold as the yellow metal reached new all-time highs in all major currencies and crossed the $2,000 mark for the first time. Buillon ended the year with a gain of about 22%. Yet this figure pales in comparison to bitcoin’s 265% annual revenue.

With the recent $1.9 billion stimulus package fueling inflation fears, assets like gold and bitcoin should theoretically do well and investors should hedge against the falling dollar. However, the recent rise in bond yields may have taken some of the shine off gold.

Others, and even some prominent analysts like Bloomberg’s Mike McGlone, believe that gold is being overtaken by bitcoin in the battle for security. Earlier this month, McGlone tweeted:

Gold will always have a place in jewelry and coin collections, but most indicators suggest that bitcoin is quickly replacing the metal as a store of value in investors’ portfolios.

Digital gold is displacing the old guard –
Gold will always have a place in jewelry and coin collections, but most indicators show #Bitcoin is accelerating to replace the metal as a store of value in investors’ portfolios pic.twitter.com/RR0CCWmksF

– Mike McGlone (@mikemcglone11) March 8, 2021

Even JPMorgan, an organization that has long been critical of bitcoin, has argued that the digital currency will eat up some of gold’s market share. The institutional adoption of bitcoin is just beginning, while that of gold is already well advanced, JPMorgan strategists led by Nicholas Panigirtzoglu said in a December 2020 report. If this medium- to long-term thesis holds, the gold price will undergo a structural reversal in the coming years.

Bitcoin, the digital gold story, continues to win even after its fall. A four-year deflation event, with the last one in May 2020, reduces the amount of new bitcoins put into circulation after each mined block.

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