Bitcoin vs. Gold: Which Wins the Race as a Haven of Value?

Thus, the spot gold price closed last Monday’s session at US$2,114 per ounce, reaching a maximum of US$2,119. This rebound extended until Tuesday, placing the price of the yellow metal at US$2,127 per ounce. This Wednesday, spot gold added 0.6% to $2,139.39 per ounce, after hitting a historic high of $2,148.99 at the beginning of the trading session. Gold futures in the United States gained 0.3% to $2,147.60.

For its part, Bitcoin broke its all-time high on Tuesday for a few minutes and then retreated, however, investors do not perceive any alarm signs. Well, the flow of capital to Bitcoin ETFs is solid and the halving is in sightwhich could skyrocket the price of the cryptocurrency.

Bitcoin vs. Gold and the store of value

For analysts, both assets are “incomparable“. This, because as it well explains Gustavo Martinezeconomist, on his social networks, “when duration plummets and Nasdaq corrects more than 2%: Bitcoin corrects. And he asks: “What happens when duration crashes and so does BTC?”, to which he replies: “That gold doesn’t even move or goes up“This, plain and simple, is justified by the fact that crypto is a risk asset and gold is a store of value.

Nevertheless, Goldman Sachs has a “revolutionary” view for the future of Bitcoin. According to the investment bank, the most famous cryptocurrency in the world could reach 50% of the reserve of value market in the next five years. The financial giant says in a report dated December 2023 that in the hypothetical case that this happens, “The price of the cryptocurrency would skyrocket above US$100,000, reaching an annualized profitability of between 17% and 18%“. Thus, according to Sachs, compared to goldBitcoin has the 20% of the current “store of value” marketHowever, the growing adoption of digital assets would push that percentage up quickly.

Market capitalization: gold vs. Bitcoin

In accordance with the top 10 assets by market capitalization which includes public companies, precious metals, cryptocurrencies and exchange-traded funds (ETFs), gold is the king of the marketcap with US$14,421 billion. However, in that ranking there is also the BitcoinHowever, in the position number 9 but above companies like Meta Platforms and Berkshire Hathawayof Warren Buffett.

In fact, at the time of writing these lines, Bitcoin is hot on the heels of silver in market capitalization for a few billion, so if the flow of ETFs remains at current values, it could surpass the metal and would be one step away from surpassing Alphabet (Google) in marketcap. This speaks to the great adoption and acceptance, at an exceptional time, of Bitcoin.

Different assets, different investors

The investment advisor, Gaston Lentini explains in statements to Ambit that, the operators who want these two assets “are very different.” What it refers to is that if you look at the price of gold, which, indeed, is at historic highs; when detailing who the buyers are, “We are going to see that they are mainly the central banks of all countries“.

Lentini maintains that, for several years now, China, the United States, Germany, Italy, Russia, Japan, have been buying and buying gold, “which is kept and is finished, what ends up being demand and therefore putting pressure on the price system and without generating any additional value”, since there is very little gold which is used for industry or for jewelry. “The bulk of gold is purchased for storage. This gives us the idea that there may be a risk of war, inflation or currency flight.“explains the advisor.

Although gold has a point in common with Bitcointhe countries that buy BTC do not place huge assets in the crypto market, except for El Salvador, as an extreme case. “Countries do not seek refuge precisely in cryptocurrencies, but in more conservative assets such as gold,” says Lentini. “I can’t imagine powers like the United Kingdom, China or even Russia pouring a huge amount of their own funds into Bitcoin, in any case. they would develop their own token“.

For its part, Iñaki Apezteguia, Chief Research Officer of Crossing Capital, adds in dialogue with this medium that the market cap gap between gold and Bitcoin may narrow over time. However, he warns that “No“Doesn’t believe this will happen in the short term. “I don’t believe that nor do I think it will be achieved in this bull market, even if BTC multiplies its value by four or five timesso that this translates into market capitalization, basically you wouldn’t have to sell more gold. “I don’t see him as close.”

Bitcoin vs. gold, so who wins the race?

Azpesteguia he plays it and warns that, strictly speaking, “If we are talking about price performance“, the decision “it is unquestionable“. What the crypto expert is referring to is that “Bitcoin has already shown an increase of more than 300% since the beginning of 2023“while gold indicates, “has not had that growth“Obviously, he clarifies that crypto has a smaller market cap, so it has more possibilities to grow than gold. In that sense, he considers that the race “Bitcoin will continue to dominate this year and next year“But for Bitcoin’s total marketcap to surpass that of gold,”I think we have to wait a few more years.“.

Meanwhile, Lentini adds that in a head-to-head between gold and Bitcoin“between now and the end of the year” definitely would lean towards Bitcoin. Her response is justified by the growing interest in cryptocurrency, which she mentions as “It is much higher on the table and has much more and better publicity than gold.“.

Digging deeper into the fundamentals, it is true that both assets do not generate “a direct income stream like stocks or bonds“but Lentini bets that”Between now and the end of the year, Bitcoin will rise more than gold“. However, it illustrates an example that changes the conditions of the question: “If I had to invest my entire family’s assets between now and the end of the year, well, I would not invest less than 90% in gold and in any case I would put a little bit in Bitcoinif they were the only assets in the world”, due to the volatility of the digital asset.

All of the above stated, It seems that the big winner among safe haven assets is Bitcoinbecause despite the changeability that characterizes it, it boasts a performance almost unmatched so everything will depend on the investor profile, although both assets are volatile cryptoassets are better instruments for the riskiest. Something that cannot be overlooked is that the halving and the growth of ETFs play in favor of Bitcoinwithout losing sight of the degree of risk aversion.