Bitcoin or gold: the prices of these values are breaking records, but which one to invest in?
Recently, Bitcoin has been in a condition of grace. The oldest cryptocurrency had a price increase to over $72,000 this Friday, March 8, 2024. a point that hasn't been attained since November 2021. It's important to acknowledge that the news has been turbulent between these two dates.
As a result, the exchange rate's evolution curve is essentially zigzagging. According to Philippe Crevel, director of the Savings Circle, "it's a volatile market, subject to an environment that is not always rational."
Periodic and occasionally substantial price swings, which may be brought on by an Elon Musk tweet or by the collapse of FTX, one of the biggest cryptocurrency trading platforms at the moment, in November 2022. The economist goes on, "While Bitcoin was initially created as a safe haven in response to the subprime crisis in 2008, it eventually drifted to become a pure speculative value." This volatility sets cryptocurrencies apart from gold, the traditional safe haven.
Nonetheless, the two share a number of characteristics. For instance, the fact that both of them are available in little amounts on the marketplaces.
Currently, 900 Bitcoin blocks—each worth 6.25 Bitcoins—are mined every day. Then, as neither gold nor cryptocurrencies are affected by economic crises like rate increases or recessions, they can both be regarded as safe havens.
Despite this, both are still dangerous investments because they could change due to other circumstances. The distinction is that it will be much lesser in proportion when it comes to gold.
Much more stable is the precious metal, whose price hit a record high this Tuesday, March 5, at almost $2,140 per ounce. The swings it has gone through in the last few years are not comparable to those of Bitcoin.
Positively: although gold has only increased by 3.2% since January, cryptocurrencies have increased by 48%. On the down side, there's little likelihood that the metal will see a collapse such to the one that happened to Bitcoin on October 21, 2021, when the price dropped by 87%.
A resurgence of trust in Bitcoin because of ETFs
"We might have had violent relapses after quick outbreaks at that time, just like in 2017." However, Thomas Romain, the French director of Bitpanda, an Austrian broker that permits the purchase and sale of digital assets, including Bitcoin, via its platform, believes that the dynamics of Bitcoin today are different.
If the price of digital currency has increased once more, it is undoubtedly due to more substantial evidence than the musings of billionaires (Elon Musk and Bill Gates, for example, who were able to influence market trends by their positions and cause a rise or fall in their respective courses).
The sustained increase in Bitcoin prices over the past few months may be attributed to one cause in particular. Following talks that had begun to drive up its price in the autumn, the SEC, which oversees the American financial markets, approved the establishment of new investment funds in January under the moniker "ETF" (for "Exchange Traded Fund").
New financial products, often known as "index funds," let you speculate on cryptocurrency prices without actually holding any of them.