Gold and Bitcoin are very different in that the price of Bitcoin is much more unstable. One of the reasons lies in the fact that about 2% of Bitcoin holders own about 95% of its market value. The great instability of the Bitcoin price brings chances for big gains, but also significant losses.
The trend of the opposite development price of gold and “digital gold” is becoming noticeable. Investment house J.P. Morgan recently announced that institutional investors are rejecting Bitcoin in favor of gold, but critics say that although some investors have abandoned Bitcoin and are investing in gold, there is little evidence that institutional investors are abandoning Bitcoin en masse.
Some investors believe that gold will continue to grow this year. The reason for that is the acceleration of inflation (price) in the USA, but also in other parts of the developed world. Huge sums of fresh money issued by the central bank and the US Congress with the aim of supporting citizens and the economy during the pandemic, take a toll in the form of rising prices of goods, products and services. In addition, increased (old) geopolitical risks, exacerbated by the pandemic, and above all bad relations between the United States and China, but also the United States and Russia, pose a background threat.
Meanwhile, Bitcoin has suffered one of its worst two-week periods. Elon Musk, CEO of Tesla, announced that his company will no longer accept Bitcoin as a means of payment due to environmental concerns that the “mining” of Bitcoin leaves behind. Just three months after the decision to allow Bitcoin payments, this twist caused an instant 10% drop in Bitcoin with a further decline. China’s decision, which is a big market for this cryptocurrency – to tighten regulations and limit Bitcoin transactions to financial institutions, has caused fears that other governments could follow the same path.
While some proponents of cryptocurrency hope that bitcoin will become a globally accepted currency, others, such as Ark Invest CEO Cathie Wood, believe that Bitcoin is an alternative to gold and will continue to grow and eventually become a less speculative financial instrument. Cathie Wood, as a successful investor on Wall Street, believes that as soon as governments stop looking at Bitcoin as a threat to currencies and start seeing it as a good investment opportunity, the “sky” will be the limit for this cryptocurrency.
By: Nitza – Gossip Whispers