Bitcoin is emerging as the credible store of value, ahead of Gold during this time of unprecedented loose monetary policy. On Monday, Bitcoin hit a new all-time high of $19,863 after a 150% run-up this year since March. Now, investors believe the digital currency is on course but won’t replace Gold as the risk diversifier.

Will Bitcoin Replace Gold as the Inflation Hedge and Portfolio Diversifier
  • Here is why Bitcoin Rivals Gold
    • Gold was considered a safe haven in the past and the baby boomer generation but is now being replaced by automated assets like bitcoin.
    • Bitcoin is gaining strong demand among the millennials, and trading the digital currency is much more functional “than passing a bar of gold around.” – Rick Rieder, Chief Investment Officer at BlackRock Inc.
    • While Gold and Bitcoin transactions can be viewed on the blockchain, a large part of gold trade occurs on London’s over-the-counter market, where less data is available.
    • Bitcoin is more transparent, unlike Gold, where “you have to trust the custodians to tell you about any flows in the market.” Lyle Pratt – Bitcoin independent investor
    • Bitcoin is a popular trading ground for a range of retail players, speculative pros, and exotic quants, while traditional investors have stayed on the sidelines.
    • Bitcoin’s rise has been due to speculative fervor, unlike Gold, whose poor performance has been underscored by market developments such as vaccine progress.
    • Funds like family offices are selling their gold exchange-traded funds holdings for Bitcoin
  • Why Bitcoin is unlikely to Replace Gold
    • Bitcoin’s market capitalization is only about 3.1% of the size of Gold. 
    • Bitcoin’s tumble last week underscores its volatility that has kept mainstream investors at bay. 
    • It is possible that bitcoin has no value in years to come while the same cannot be said of gold. – Patrick Armstrong, Chief Investment Officer, Plurimi Wealth LLP.  

Gold is currently gaining as Bitcoin loses.  XAUUSD is up 1.62%, BTCUSD is down 1.62%