Bitcoin and gold are clearly becoming competitors in the fight for investor attention. Gold reigns when it comes to store of value. Bitcoin remains the riskier but more rewarding digital upstart. Here is what industry insiders have to say about the two asset classes.
Gold remains the industry standard for store of value. However, the more versatile digital asset is gaining ground on gold. Bitcoin has seen its popularity soar over the past ten years.
Investors are now considering holding Bitcoin for the next ten years. This is an extremely fast maturation: just ten years ago Bitcoin would not have even been mentioned as a comparison to gold.
Industry experts for both gave Business Insider their feedback on why they would hold gold or Bitcoin for the next ten years.
Gold Versus Bitcoin
Gold has been around for more years than we would prefer to count. Its competitor has only been on the scene for just over ten years. During that decade or so, Bitcoin has climbed from just mere cents to now ranging at over $56,000 per Bitcoin.
The digital asset is now more expensive than an ounce of gold, which currently costs $1791. Essentially, one Bitcoin could buy you nearly one kilogram of the metal. Bitcoin has recently broken the $1 trillion market cap and could quite easily be eyeing an attack on gold in the future.
Diversification is a main reason for investors and industry players to consider putting their money in the digital currency. Gold maximalists, though, believe Bitcoin is either just a fad, or a volatile digital speculative asset that does not hold value well.
Go for Gold
Former Chief Economist and strategist for Merrill Lynch David Rosenberg believes gold is a better bet. The strategist explains that gold has thousands of years of historical data to show it is a proven store of value. Rosenberg also mentions that Bitcoin volatility is five times that of gold. He further states, “ The day that Queen Elizabeth trades in the five pounds of gold in her crown for crypto is the day I’ll shift course.”
The proven track records of gold and silver make them desirable assets to hold long term. Phil Baker, President and CEO of Hecla Mining Company, believes that cryptocurrencies are fundamentally different from precious metals, and that all cryptocurrencies will do is improve the metals’ value.
Sylvia Carrasco believes that Bitcoin’s ability to retain its value long term is highly questionable. The Goldex founder also reiterates that the precious metal is the safe-haven asset of choice. Explaining that all the hype for the new kid on the block does not mean it will eat into gold’s market share.
Investment strategy officer at Glenmede Michael Reynolds believes Bitcoin is more relatable to equity assets than gold. Reynolds explains that the demand for Bitcoin “may be over its skis relative to its likelihood to carve out a significant economic or financial use case.”
Once again, Robert Minter of Aberdeen Standard Investments brings up gold’s history as a building block of the global money for over 5,000 years. Minter calls cryptocurrencies a poor monetary substitute, relating this predominantly to the volatility of Bitcoin.
Anthony Pompliano of Morgan Creek Digital Assets explains that Bitcoin is a 100x improvement over gold as a store of value. The Bitcoin maximalist explains that Bitcoin will likely continue to increase in price appreciating against the US Dollar. Pompliano believes gold will be overtaken by Bitcoin’s market cap by as soon as 2030. Pompliano further states “I own no gold and have a material percent of my net worth invested in bitcoin.”
Pavel Matveev, CEO of Wirex, admits that the bull run has gained massive attention for the market. Matveev believes gold and BTC are quite different and that the gold is merely a defensive purpose, which is to store value. Bitcoin, instead, offers several use cases including the ease of exchange.
JP Thierot of Uphold also believes that the use cases for digital assets makes them an attractive option. Once again, the store of value for precious metals is mentioned. Thierot states that the upside momentum of Bitcoin could see it grow over the next decade as price continues to climb. “Bitcoin is also finite, unlike gold. No increase in demand can change that. There is zero elasticity.”
Daniel Ives of Wedbush Securities believes that use cases for Bitcoin continue to grow. Stating “we believe bitcoin will be a mainstream asset class in the future”.
Lastly, Mike Venuto, co-portfolio manager of the Amplify Transformational Data Sharing ETF, adds a valuable point. Venuto opts for having both in a portfolio. He states that he would add both assets stating “I would add gold as a diversifier. I would add bitcoin as a diversifier. The hedge is diversification. Bitcoin is a tool to get there. Bitcoin is a hedge to losing money to something stable.”
It is evident that maximalists on both sides believe their respective asset classes are better to some extent. But it is also clear that diversification into both is a viable way to go. Bitcoin certainly proves to be more volatile than gold, which remains a stable method of holding value. However the use cases of Bitcoin make it a likely investment option for investors.