Gold is one of the oldest safe havens in the world. The precious metal has been used by different civilizations and it has helped individuals to store value during periods of economic uncertainty. The main question is whether Bitcoin (BTC) will ever be able to become a similar asset to protect users’ value.
Gold: A Safe Haven Asset
The price of gold has been growing in the last five years as a safe haven asset used by investors to protect their wealth. Gold is usually used in order to reduce users’ exposure to volatile markets or periods of economic uncertainty.
Bitcoin was created as a cryptocurrency that aimed at powering a new financial system not dependent on banks and intermediaries that created a crisis such as the one we have seen in 2008 and 2009 around the world.
Many investors and enthusiasts believe that Bitcoin could eventually become a store of value such as gold. However, there are many challenges that Bitcoin will have to face in order for it to be considered a real store of value. This is due to the fact that the price of the most popular digital asset fluctuates at all times.
Bitcoin and other cryptocurrencies are very volatile. Indeed, they can move up or down by over 40% in just a few hours. This is something that harmed them. Investors are not able to use them as a store of value.
Many traditional fiat currencies have been experiencing high inflation rates and investors in these markets decided to move to gold and other safe assets with a high fixed interest rate. Bitcoin is still an asset that needs to be recognized as a store of value and that needs to offer a more stable price for investors if it wants to be adopted as the ‘new gold.’
During the last year, many central banks decided to lower interest rates. This has created a situation in which many expect inflation to grow, spending to increase and savings to decrease. Moreover, stock markets could also be inflated due to the low interest rates applied by these central banks.
Bitcoin could also be benefited in the long term if fiat currencies cannot be trusted as a store of value. Many countries have negative real interest rates and this is certainly affecting users’ ability to save money.
