From the beginning of 2022, gold performs better than bitcoin; What is the best tool to deal with inflation?



Since the beginning of 2022, bitcoin has lost about 20% of its value, while the price of gold has risen by about 10% over this period. The precious metal, which is now traded at a price close to its historical records, has long been used as a tool to preserve value and counter inflation, as seen in the Russia-Ukraine war; But can bitcoin also be a tool for storing value or is it a traditional asset title?

Earlier this week, bitcoin failed to make double-digit jumps and reached below the level of 40,000 dollars, which is a very important psychological level, according to CryptoSlit. Data from the Santitment platform show that as distrust of high-risk assets around the world grows, the old rivalry between bitcoin and gold as the best way to store value continues.

Sentiment wrote on Twitter:

Earlier this week, bitcoin returned to the $ 38,900 range, followed by the S & P500 index. The relationship between the two will continue, while bitcoin can make a significant leap. Meanwhile, gold prices have risen since the start of the Russia-Ukraine war.

In the graph below you can see that with the growing likelihood of conflict between Russia and Ukraine, the trend in the price of bitcoin and Index S & P500 Gold, on the other hand, fell about 4 percent.

From the beginning of 2022, gold surpasses bitcoin in the face of inflation
Comparison of bitcoin performance, S & P500 index and gold.

Implementation of bitcoin and gold in 2022

At the time Russia invaded Ukraine, gold was growing faster and peaked in August 2020. However, the price of bitcoin, which Micro Strategy CEO Michael Sailor says is the best source of value, fell by 14 percent in one day.

The rise in the price of gold and the fall in the price of bitcoin on February 24 (March 26) was not the end of the story. After the Ukrainian government officially announced that it was raising funds through Bitcoin and Atrium, the price of gold fell almost quickly, with bitcoin rising by more than 17%. The aid sent to Ukraine in digital currency was quickly cashed in Fiat. The government never intended to accumulate these bitcoins and sell them as soon as they received digital currencies. It was the need to finance the war in Ukraine that increased the pressure on market sales.

The competition between bitcoin and gold continued at the beginning of the week. Today, gold surpassed bitcoin and peaked at $ 2002. However, gold is only 5% off its historic peak in 2075, and it is very likely that this level will act as a strong resistance. At the same time, bitcoin is gradually approaching the support of $ 37,700 and $ 35,254, which are its historical levels of support. It will be very exciting to see what lies ahead, but the question is whether these events will affect the claim that bitcoin is the best tool for storing value?

Is Gold a Better Value Storage Tool or Bitcoin?

Many traders have been arguing for years about whether bitcoin is better for storing value or gold. Some people believe that the high potential of bitcoin for growth shows that it can perform better than gold. However, the theory that bitcoin is indeed a means of storing value has not yet been well studied in times of turmoil such as the present.

Peter Schiff, a well-known critic of bitcoin, tweeted two days ago:

The Russian people want to preserve their wealth in a way that the government cannot seize. They will choose gold instead of bitcoin. Bitcoin still carries a lot of risk and is not a safe haven for storing value. Bitcoin failed its first big test. I don’t think this digital currency can get a second chance.

But is he really right? Is Bitcoin an important moment nowadays?

The problem is that given the microeconomic events that have taken place on certain days, it is not possible to say whether bitcoin or another asset has the potential to retain value in the long run. To look at this statement, we need to look at Chinese blockchain technology and study the speed of its space development. Analysts expect the size of the Chinese blockchain market (which means Chinese blockchain technology itself) to reach $ 67 billion over the next four years. In this case, the annual combined growth rate in this market will be 68.4%. In addition, people can “easily” send their bitcoins to family, friends and charities around the world, and this is one of the characteristics of this digital currency.

Man has been using gold as a means of storage for thousands of years and is still unable to send the physical gold itself to his family members using a mobile app. However, any human being can send the value of bitcoin to those he loves in just a few minutes.

The question is, what makes an asset a means of storing value in 2022? If this device is to protect us from the daily fluctuations of the financial markets, the chart above shows that neither gold nor bitcoin can do that. On the other hand, if our definition of a value-saving tool is something that can become more valuable in the long run or at least retain its value, we can say that bitcoin has not yet failed its test.

But in an increasingly digital world, does it really make sense to have a digital tool for storing value?

Post Gold has outperformed Bitcoin since early 2022; What is the best tool to deal with inflation? appeared first for currency.

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