Bitcoin vs Gold: Is ‘Digital Gold’ Ready to Set the New Standard?

Recently, Mike McGlone, the sharp senior commodities strategist at Bloomberg, brought up a fascinating discussion: could Bitcoin, often dubbed “digital gold,” overtake the precious metal in relevance in the near future?

Bitcoin’s rapid rise and consistent expansion of its network in recent years has been remarkable. Complementing this growth, declining holdings in gold-linked exchange-traded funds, in contrast to the anticipation surrounding US spot Bitcoin ETFs, signals a shift in investment preferences.

• US Dollar spot gold price was quoted at 1,983.05, up 0.18%, at the time of publication.
• The price of BTC was quoted at US$34,500.19, up 1.7% in the last 24 hours, at the time of publication.

In detailing his analysis, McGlone noted that where there previously existed resistance in the BTC-gold ratio of approximately 10x through 2020, this number may be consolidating as firm support. The possible approval of Bitcoin ETFs in the United States could be the push the cryptocurrency needs to further establish itself in major global markets.

Bitcoin ETFs Could Erode Gold’s Relative Standing – #Gold‘s relationship to #Bitcoin may be deteriorating. What was resistance until 2020 at a crypto-to-gold multiple of about 10x may be transitioning to an enduring foundation. The inevitable approval of US spot Bitcoin #ETFs is… pic.twitter.com/W4j9p4tMgB

— Mike McGlone (@mikemcglone11) October 25, 2023

However, it is not a bed of roses for Bitcoin. Although the digital asset has shown impressive resilience, especially when compared to stocks and bonds, it still carries volatility that is about 3.5 times that of gold. A recession, like the one Bloomberg Economics predicts for the US at the end of the year, could be a litmus test for Bitcoin’s resilience.

McGlone, on the other hand, didn’t rule out gold. He remains optimistic about its value, particularly if the U.S. faces a recession. Bitcoin may be gaining ground, but gold, with its history of being a safe haven, still plays a vital role in the financial landscape.

In the grand scheme of things, while Bitcoin may be positioning itself as the “digital gold” of the future, the battle between old and new is far from over. What is undeniable, however, is that the investment landscape is evolving, and both assets have key roles to play in the financial tapestry of the future.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.