There are many debates and public statements about the advantages of bitcoin over gold. These two digital assets, one a physical asset and the other referred to as the “digital gold”, have both gone head-to-head when it comes to which one is the better store of value. Last week’s bitcoin crash brought back the debate over whether having a more stable asset, such as gold, is better than one like bitcoin.
Protective Coverage with Gold
The price of bitcoin has fallen more than 30% in the last week. As the other cryptocurrency markets followed, there was an ocean of red. The year-to date value of bitcoin dropped significantly during this period. The digital asset that had outperformed its physical counterpart for a long time, was now back behind it.
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Even though gold has seen a decline in its year-over-2018 returns, the value of the metal is still positive. Bitcoin’s return to the green was lower. Gold is currently up 0.6% over the past year, which puts it into green territory. The cryptocurrency bitcoin is currently down 55% over the past year.
Traditional finance traders have been concerned about bitcoin’s volatility. But, the greatest drawback for people who have invested in this asset is its volatility. After a record-breaking 50% increase to $69,000 in 2013, it plummeted to $17,600 over six months.
BTC prices trading below $21,000| Source: BTCUSD on TradingView.com
Although bitcoin has been affected by the selling, it is not as bad for gold. When it comes down to which digital asset is better at inflation hedge, the gold coin has won the battle.
Is Bitcoin going down?
Bitcoin’s recovery streak has been encouraging over the past couple of days. The recovery from the low of $17,000 has been steadily steady, with a few minor dips. For the first time, the recovery has been above the 5-day average in the past week.
The market is still under selling pressure, and there are more sales. But, the $18,000 mark is becoming more supportive.
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The implications for digital assets falling below their previous highs are not only obvious but also significant. This has supported the belief that bitcoin has yet to reach its bear market bottom. The bottom of bitcoin’s previous market falls at least 80% means that it is most likely to be around $13,000
Also, it is likely that the bottom will occur approximately 15 months after previous halving. This would place the bottom in the fourth quarter 2022.
Bitcoin trades at $21,313 as of the writing. With a market cap at $405.8billion, it is up by 1.93% within the last 24 hour.
Featured image by Kinesis Money. Chart on TradingView.com
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