Can Bitcoin Compete With GOLD As A Store Of Value?

Based on the market evolution and current metrics — no, Bitcoin can’t compete with gold as a store of value. As a matter of fact, it has a higher correlation with the stock market. Still, it’s a relevant asset in every crypto portfolio.

What is a store of value and BTC & Gold similarities

A store of value is an asset that maintains its value over time. Therefore, the ideal store of value would have little risk and could be trusted to stay valuable well into the future, without external factors like the price of other goods and services influencing its value.

Gold has been used as a store of value since ancient times since it is naturally scarce and has no digital equivalent. Bitcoin was created in 2009 and has some similarities with the precious metal:

• Both have a limited supply: gold’s supply is limited since it’s expensive to create it from other elements. Bitcoin has a built-in issuance supply of 21 million tokens;
• Both need to be mined and get harder (and more expensive) to be mined over time;
• The majority of investors see both assets as safer than their pairs.

Bitcoin vs. gold and?stocks

We cannot analyze the correlation between Bitcoin gold and other traditional assets from the beginning because BTC has surged more than 700,000% since 2009. It took more than a decade for the crypto market to mature and make Bitcoin the consolidated mainstream asset of its sector, which now has more than 19,000 different tokens.

Although, when comparing the short-term performances of Bitcoin with gold and the stocks market (S&P as baseline), it is possible to make inferences. First, it’s essential to notice that Bitcoin is still a relatively new asset compared to gold (traded BCE) and stocks (started in 1817) and hasn’t been through major a global crisis.

The closest that BTC has been through was the onset of the Covid-19 pandemic. Then, on January 9, WHO (World Health Organization) announced coronavirus-related pneumonia, and less than a month later, the US declared Public Health Emergency.

On February 25, CDC said COVID-19 was heading toward pandemic status. At this time, Bitcoin, the S&P, and gold went through a negative performance in the short term. Bitcoin fell almost 50%, while stocks fell by 34%, and gold fell by 8% (but rapidly recovered).

Source: Koyfin

Can Bitcoin really compete with gold as a Store of?Value?

Gold has been around for thousands of years, giving it a long history and a strong valuation. Investors value data in the decision-making process, and gold’s history goes back so far, while Bitcoin hasn’t completed 15 years yet.

Furthermore, there is evidence that the price of gold can rise as an asset when people are uncertain about their future: otherwise called “flight to safety.” In contrast, Bitcoin may not have enough information on its future. Based on the bearish Covid-19 scenario, there are signs that the BTC correlation is more substantial with the S&P rather than with gold.

Bitcoin can’t be considered a store of value as gold is. Still, it is the less volatile crypto asset today and the one that determines the market directions. In a crypto portfolio, Bitcoin is the safer pick and so far has presented signs to be the most sustainable token in the crypto sector.

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Joe Robert is currently the Chief Executive Officer of Robert Ventures, with over 20 years of asset management experience. Since he has started Joe has created predictable double-digit returns for investors & Partners. Joe has invested in seed rounds with equity and tokens, along with a portfolio of Bitcoin, Ethereum, and other top cryptocurrencies.