The Goldclub Review

Gold vs Bitcoin: 2022

What is Bitcoin?

Bitcoin is a decentralized digital currency started in 2009 that has gained major popularity. Bitcoin has a limited supply and can be traded through the bitcoin network without any intermediary like a bank. It can be bought on cryptocurrency exchanges and stored in digital wallets where the bitcoin could then be used for transactions.

Bitcoin has long been called digital gold. This is because of the idea it can provide a store of value similar to that of gold. People who want to diversify their portfolio in assets other than stocks have started to look at bitcoin as that option. Some buyers believe bitcoin is another safe haven option to protect their wealth. 

Price of Bitcoin

At the onset of the pandemic in 2020, stocks began to crumble. At first, bitcoin’s price dropped, but it quickly recovered as investors started pouring money into it. Within the next year, the price of bitcoin jumped from a low of $5,000 to a high of around $61,000. 

However, in 2022, with inflation at a historic high, bitcoin has underperformed. During this inflationary period, gold has outperformed bitcoin. The price of bitcoin is at ⅓ of its high of $69,000 since November 2021. The price has dropped due to geopolitical tensions like the Russia-Ukrainian conflict and climbing inflation. It has followed a similar path to the stock market. Although gold has also dropped in the past couple of months, it has retained its value much better than bitcoin.

Bitcoin is still too young of an asset to be considered a safe haven. As we have seen over the past couple of years, it is volatile and speculative. There are still a lot of risks associated with bitcoin. This has led to selloffs and fewer people holding bitcoin for the long term. As bitcoin grows and we see how it reacts to other economic events, we will continue to learn more about it and its use as a store of value. This could help its case as a competitor to gold.


Price of Gold

Gold’s history of maintaining its value during economic downturns makes it a safer bet than bitcoin. During the beginning of the covid-19 pandemic, the price of gold also had a quick drop. Its price quickly recovered, and by August 2020, it reached an all-time high of around $2,100. In 2022, we have seen a drop in the price of precious metals, mainly due to the risk of high-interest rates. Even with the drop, gold has continued to provide stability and has ensured investors gold is a valuable asset to have in their portfolio.

If you compare the price charts of gold and bitcoin, you will see some similarities. However, one main difference you can see is the price of gold has been steady, while bitcoin has fluctuated a lot more. A lot of risk-averse investors who are looking to store their wealth might look to gold instead of bitcoin for this reason.


Gold vs. Bitcoin

The physical nature of gold is a plus for many investors. There are very few investment-grade assets other than precious metals that you can hold in your hand. Although decentralized, bitcoin still relies on technology. An investor cannot touch bitcoin, as it is a virtual currency. If you are looking to find a tangible, real-world asset to add to your portfolio, precious metals would be a great addition.

Gold has also proved its stability for thousands of years, while bitcoin has barely been around for 10 years. Many investors are looking for reliability, which is where gold has the upper hand. The history of gold provides investors with a security blanket, knowing that its value will not disappear, even during some of the most difficult societal and economic crises. Bitcoin cannot provide the same, as it does not have enough history to look back on. It could still be considered an option for investments, but it does not live up to the nickname, “digital gold.” Bitcoin continues to be too speculative to ensure its value, whereas gold will continue to provide stability.

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All Updates and Market info are provided as a third party analysis and do not necessarily reflect the explicit views of GoldClubDirect LLC.. and should not be construed as financial advice.