Gold has had a good year on average, setting two new six-year records in the spot price and futures market. Since Bitcoin is touted by bulls has a better store of value than gold, what does the gold rally mean for Bitcoin?
For quite a while now, there have been many discussions about Bitcoin’s eligibility as a proper store of value and whether or not it can sustain what status it currently holds in that regard. In the traditional markets, gold is highly regarded by many because it’s officially recognized by the world’s governments and financial institutions.
Currently, gold is priced just a little under $1,400 but according to a prediction from Independent Strategy’s President and Global Strategist, David Roche, it will increase by at least $600 and hit $2000 before the year runs out.
It’s definitely noteworthy that gold has been on an interesting trajectory setting a new record a few weeks ago. In fact, gold’s spot price on Tuesday the 25th of June hit $1422.85, setting a new six-year record. Furthermore, gold futures market also hit $1417.70 which is also a new record in almost 6 years.
Roche has explained that the asset seems to be performing relatively well despite certain conditions including a looming interest rate cut by the Federal Reserve and certain regional fears, all of which should normally pose a threat to the regular workings of financial markets. Speaking on these markets, Roche said:
I actually believe financial markets are now poised to crumble like a sand pile.
Regardless of the expected “crumble” in the financial markets, Roche still maintains that gold might be unaffected and would rise to $2,000. He believes strongly in this possibility and has advised investors to hold gold in preparation for this.
What Does This Mean for Bitcoin?
Bitcoin, among other things, thrives favorably amidst economic pitfalls and this is a parallel that can also be drawn with gold. Whenever there’s a Bitcoin surge, there usually are a thousand and one different explanations and possible opinions about why it happened. For gold, however, it’s not very straight forward and it’s sometimes difficult to determine the reason why a surge occurs.
There really aren’t a lot of pointers to the existence of a direct relationship between the yellow metal and the world’s number one digital asset. Regardless, it’s interesting to think about the “store of value” argument and whether or not it’s possible for traders to slowly shift from Bitcoin to gold if the latter continues to rally and set new records.
Will People Leave Bitcoin for Gold?
Even if you’re a strong Bitcoin bull, there are a few points to be made for the continued use of gold. One of the major factors is the market’s strength and age. Gold has been around for many centuries and has been a very successful medium of exchange as well as a store of value. However, to the average Bitcoin bull, this means next to nothing.
In 2019 alone, Bitcoin has been one of the world’s most successful assets and has brought more returns than the assets in the traditional markets including gold. This is a great point for both retail and institutional investment in Bitcoin but another factor probably stronger than this is the Bitcoin sentiment.
Most Bitcoin enthusiasts are very dogged in their belief in Bitcoin and the cryptosphere. Bitcoin has experienced wild surges in the past and the truth, regardless of whatever calculations or analysis can be made, is that if it’s happened before, it can as well happen again.
Gold has been rallying alongside Bitcoin this year although not on the same levels. However, we might be able to conclude that for gold to rally enough to change the minds of Bitcoin bulls, well, the yellow metal has a lot more work to do.