This year has been very volatile for both traditional and cryptocurrency markets, as the effects of the Covid-19 pandemic continue to hit economies around the world hard.
How does BTC work in comparison to traditional assets.
The recent rally in the cryptocurrency markets, which led to the growth of BTC up to $12 000, attracted the attention of institutional and retail traders who were previously skeptical of cryptocurrencies.
Moreover, as inflation grips many economies as a result of government stimulus policies that pump money into the global economy, many ordinary people view gold as a hedge because of its rarity and resistance to inflation.
In the first four months of 2020, Bitcoin managed to record a larger increase than gold, silver and crude oil. The cryptocurrency grew by almost 33% and became the most profitable asset in the first quarter.
In comparison, gold rose only by 13%, while silver fell about 14%, and crude oil lost more than 70% in value.
After the market crash in mid-March, when global stocks experienced their worst trading sessions in years, BTC rose in value more than all other traditional assets as it gained notoriety as a means of saving.
Despite the fact that the mentioned crash also devalued more than $ 4K of the value of the bit, the crypto asset quickly recovered in two weeks, as investors sought to keep their funds in safe assets.
Moreover, the digital asset soared above others as individuals increasingly invested in BTC in the run-up to the may halving.
BTC will turn into a gold store of value.
Bitcoin also surpassed gold and precious metals in the first half of 2020, prompting Bloomberg to speculate that Bitcoin will be the digital gold of the year.
According to their report, this year marks a crucial test for Bitcoin’s evolution into a quasi-currency like gold. Financial analysts also added that Bitcoin can move from a risky speculative asset to a version of gold on the cryptocurrency market.
According to data from the crypto-analytical firm Messari, the opinion about turning BTC into digital gold in terms of its characteristics as a means of saving looks strong.
Messari shared the chart below, highlighting that in the first half of this year, the cue ball grew by more than 27%, outpacing precious metals including platinum, gold and silver.
Although it has outperformed other traditional assets, the growth of BTC over the past 12 months has been characterized by high volatility. The price of cryptocurrency constantly rose and fell, and the cost of gold steadily increased.
This historical instability in the crypto markets has made David Lifshitz, a partner at cryptocurrency firm ExoAlpha, suggest that investors should view gold and BTC as additional investments, rather than as competitive ones. Lifshitz believes that storing digital and physical gold together could improve the risk and return profile than storing either of the two assets separately.