According to the experts, the big money flows from gold to bitcoin. As the outlook for gold declines, that of bitcoin begins to shine more and more.
In the past week, the price of gold suddenly shot down by almost 5%. Previously, the precious metal and bitcoin were heading for new heights.
From gold to bitcoin
CharlieMorris, the founder and CIO of ByteTree Asset Management, announced in a tweet on Friday that the pullback of gold may have something to do with bitcoin. According to the investor, more and more people are starting to switch to bitcoin, the digital equivalent of gold.
Jim Cramer, the host of the CNBC programme Mad Money, also announced that the outflow of gold is all heading towards the crypto sector.
Holger Zschaepitz observes the same. He points to the inflow of more than $3 billion into the Grayscale Bitcoin trust since October. During the same period, gold ETFs lost $7 billion in value.
He also mentions JPMorgan’s statement that competition between bitcoin and gold will only intensify when millennials have more power.
Legitimation bitcoin as a new asset class
The rise in bitcoin shows that our favourite digital currency is definitively beginning to nestle in the financial world. Like the precious metal, people see bitcoin as a way to protect themselves against inflation.
The macro-economic context we are currently in seems to be the perfect storm for bitcoin and the outlook is even better. At the moment, the total market value of bitcoin is only 6% of that of gold, but the digital currency is catching up with the precious metal.
It looks like bitcoin is going to win this race, and as soon as the big money switches it can suddenly go very fast. Last Friday, the value of one bitcoin exceeded the magical limit of a 20-ounce gold bar.