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Traders Revisit the Age-Old “Bitcoin or Gold” Question

The atmosphere surrounding cryptocurrencies such as bitcoin has gotten crazy following news of a $2 trillion stimulus package in the U.S. and the growing coronavirus pandemic. Many are revisiting the question of whether bitcoin qualifies as a “safe haven” asset and if it’s comparable to gold.

Is Gold Still Better Than BTC?

Matthew Dibb – the co-founder of Stack, which provides index funds and cryptocurrency trackers – commented on the overall situation:

The trade tensions, political turmoil and virus outbreak are some of the events that have led investors to look at uncorrelated assets, such as bitcoin, to hedge their portfolios. We saw a significant inflow into bitcoin, particularly at the end of last year and the start of this year. This has been further heightened by the anticipation of the bitcoin halving, which will take place in May.

While it may be true that people are turning to bitcoin as fear of inflation rises, not everyone places bitcoin on a high pedestal, and they still believe that assets like gold deserve more recognition.

One such person is Stephen Innes, a market strategist at Axi Trader. He states that bitcoin and gold should in no way be placed on the same plane, explaining:

I will not categorize bitcoin as a safe-haven asset. In fact, I would not even put silver in that category. It just does not have the same backing power. I would be more comfortable if central banks were using it as a reserve currency, but the problem is they are not, and I do not think it will ever be.

Jeffrey Halley agrees. As a senior market analyst with Asia-Pacific, Halley claims that bitcoin still suffers from high volatility and that the price swings it suffers from make it one of the most dangerous assets available today. He comments:

Bitcoin prices fluctuated heavily last year, even up to $13,000 USD at one point… There should be alarm bells ringing if a safe-haven asset were to move the way bitcoin does. Safe-haven assets typically do not shoot up 300 percent over the course of six months. When pundits are saying that, they are choosing the data points they want to use. Cryptocurrencies do not pay interest and once you lose your key, you have lost your money forever. I do not know if it is as secure as everyone makes it out to be.

BTC Is the Best Thing… For Some People

By contrast, Kelvyn Chuah – co-founder of digital asset platform Sinegy Marketplace – believes that bitcoin can be a “safe haven” for anyone who takes the time to really research it and understand it. When describing BTC, he explains:

Higher risk typically means higher returns… Millennials, for example, who are more tech-savvy, would believe in more decentralized assets. Hence, they would choose to invest in something like bitcoin.

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