Gold and Bitcoin are seen as rival investment options. But why? With the rising popularity and price of Bitcoin, people have started to recognize it as digital Gold with much more use cases. In fact, many people say that Bitcoin will topple Gold in the future and will become the most valuable asset in terms of market cap. While BTC has thrived in the last ten years with an average CAGR of well over 200%, Gold hasn’t moved in the past decade. And if you factor in inflation, then it has actually decreased in value. This is probably the reason why institutional investors are dumping Gold for Bitcoin.
J.P. Morgan on Bitcoin and Gold
The bank says that people are moving from Gold to Bitcoin, thinking of it as a better inflation hedge. In fact, the assurance that the US will not ban crypto and this shift has been one of the primary reasons for the recent price increase of BTC. Inflation is at its peak, and people need an asset to preserve the value of their money. Gold has failed during this time by dipping in value while BTC has surged. This is why money is flowing out of Gold to Bitcoin.
Another significant development for BTC was El Salvador making it legal tender. The country has also purchased 700 Bitcoins, and the citizens of the country are also using it. The lightning network built on top of BTC has made it possible for transactions to happen at a fast speed with almost negligible rates. All this is pushing adoption. In fact, in 2021, almost 20 billion dollars went into Bitcoin ETFs while 10 billion dollars flowed out of Gold ETFs. This has helped Bitcoin reach where it is today.
While all this is happening, we should also note that J.P. Morgan’s CEO thinks that BTC lacks any intrinsic value. Yes, you heard that right. While the bank is offering crypto services, the CEO thinks that regulators will “regulate the hell out of it.”
What are your thoughts on investors dumping Gold for Bitcoin? And do you believe that BTC is a better inflation hedge as compared to Gold? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.