Buy Bitcoin or Gold is a question that has occupied the minds of many these days. As inflationary pressures mount in the economy, investors are worried about the devaluation of money . Traditionally, keeping gold in a portfolio seems like a viable option in such circumstances. But the cryptocurrency market has been hot for several years, and digital currencies have become very popular as an investment. So much so that many have even considered it an alternative to investing in gold.
As both large and small investors are attracted to digital currencies such as bitcoin, the question arises as to whether new digital assets can have a secure place in the portfolio or should they rely on a traditional value reserve such as gold?
The question of investing in digital currency or gold may be a lot of questions that need to be answered from different angles. In this article , we will look at Bitcoin and Gold , which can be a good investment option.
Gold; Secure assets
Gold has been around for centuries as a valuable commodity . Gold is valuable to the people because over time it has been able to prove itself as a secure asset . In fact, gold has always been a safe haven for investors throughout history, but bitcoin has not yet proven itself in a global financial crisis. For example, in the Great Recession of 2008, Bitcoin did not yet exist to measure its performance in such circumstances.
Gold is a credible asset that is widely recognized as a safe investment. According to official data, central banks, large government institutions, pension funds and family investment offices will always devote part of their portfolio to gold.
Some investors are interested in considering gold as their money insurance . If there are concerns about a country’s currency, or in the event of an economic crisis, people are usually looking for gold because it has always been more profitable in times of crisis.
The price of gold has experienced similar price fluctuations in the short term as the stock market, but in general, the value of this precious metal has remained stable over time. Since we live in an era of high market price fluctuations, it makes sense to dedicate part of our portfolio to gold.
The price of gold can withstand inflation, making it a great protector against inflation. As prices rise, so do the value of Fiat currencies, and so does the value of gold, as investors turn to precious metals to maintain their purchasing power.
But keeping gold does not make a profit, and the question arises as to whether the commodity is essentially worth the investment.
As you know, gold does not generate recurring income compared to other assets such as real estate (rental income) or stocks (dividend income).
There are other downsides to consider. The cost of maintaining and storing large quantities of this precious metal can be very high. It is also usually purchased and stored in large sizes and shipments. Therefore, it is very difficult to determine the purity and source of its large volume.
Although proponents of gold believe that gold is not intended to generate revenue; Rather, it is the preservation of wealth in times of uncertainty .
Finally, experts believe that if you are looking for a safe asset that is negatively correlated with other assets in terms of price movement; Gold plays an important role in stabilizing your portfolio as a Buy & Hold investment. In addition, gold is used as a portfolio diversifier and asset protection against inflation. All of these benefits can lead to positive returns over time.
Bitcoin; Digital Gold
Bitcoin is the world’s largest cryptocurrency in terms of market value or market cup. Unlike the stock market, the cryptocurrency market allows users to trade bitcoins and other digital assets 24 hours a day, seven days a week.
One of the key features of Bitcoin is that it has a fixed supply; This means that only 21 million bitcoins will be produced and circulated. From a theoretical point of view, given the fixed number of these assets, if there is still demand for it; Its value must increase over time. But there is no guarantee for this.
Just like gold and other precious metals, bitcoin derives most of its value from limited supply and growing consumer demand, but the price of bitcoin fluctuates sharply . In the last few months alone, the price of bitcoin has dropped from $ 64,000 to about $ 32,000 and continues to fluctuate during this period.
In addition, bitcoin has not yet been widely accepted, and the question is, to what extent will it be considered over time? Therefore, speculation about the price of bitcoin continues.
For some financial experts, bitcoin has been an excellent risky asset. They also believe that the study of the long-term correlation of Bitcoin with other asset classes needs further investigation. Because Bitcoin currently has a lot of volatility, and given its short lifespan relative to gold, the two can not be compared with certainty in the long run.
Bitcoin is a volatile and risky asset, and it may be difficult for some investors to tolerate large fluctuations in this currency. This instability results from a wide range of events.
For example, from the Chinese government’s crackdown on digital currencies to Ilan Mask tweets about digital assets, all have had a major impact on the price of those assets. But despite all these problems, experts believe that the presence of bitcoin in your portfolio can play a very important role.
One of the views of financial activists on bitcoin is that because this asset class has a small price correlation with gold and the US dollar; It creates more opportunities to diversify the portfolio and this may increase its price in the market.
Another attractive feature of Bitcoin is the use of China Blockchain technology at its core. This technology has revolutionized the type of transactions. The China Bloc acts as an intermediary for the exchange of money between individuals, eliminating intermediaries such as banks and other financial institutions and strengthening decentralized markets.
Buy Yet Coin or Gold; This is the problem!
The advantages of Bitcoin over Gold include decentralization, limited supply, and the ability to transfer and trade Bitcoin with anyone anywhere in the world .
But the benefits of gold attract the same consensus. Because gold is more of a stable asset ; You do not need to be constantly buying and selling unless your investment strategy is that way. But Bitcoin may not follow this strategy. Bitcoin is a volatile asset and investors should always set an appropriate entry and exit strategy when entering this asset.
If you do not know which asset to choose for your portfolio from gold and bitcoin , it is better to review your investment goals and make the right choice accordingly.
Many of the most prominent people in the financial sector believe that gold and bitcoin can both fit together in your portfolio, but the amount and percentage of it depends on your risk-taking and financial plan.