Have you seen articles’ coming out that Bitcoin is taking up Gold’s market share and could even overtake it?
The fact that this is even a possibility is huge for this cryptocurrency.
Bitcoin has heavily outperformed the expectation of many, and this is evident as it was named the top-performing assets of 2019, outperforming gold, silver and crude oil.
The world’s most valuable crypto has grown by a third in value since mid-march 2020 despite the crash that wiped a lot from its value. In this same period, gold only grew by 13% while silver and crude oil have dropped in value.
So, can Bitcoin really overtake gold?
Is it possible for Bitcoin to Overtake Gold?
In an interview with Bobby Lee, the former CEO of Bitcoin exchange BTCC, predicted that the flippening would take place within nine years and Bitcoin will shoot immensely. Flippening refers to a future event that will see one cryptocurrency (Ethereum) dominating Bitcoin in terms of market capitalization. Nevertheless, in this scenario, Lee used it to mean that Bitcoin will overtake Gold.
Lee went further to point out that the Bitcoin deflationary value will help it reach a high market capitalization when compared to gold. The deflation occurs during the halvening, which is conducted after every four years (the third one being now on 12 May 2020).
From ages, gold has been the most preferred store of value, but this may not remain to be the case. This is because Bitcoin has greater features; for example, it is easily accessible, especially to young people, thus overtaking the market capitalization.
Is it Better to Invest in Gold or Bitcoin?
Before investing in any of the two, it is important to understand how both work. Both Bitcoin and gold are perfect assets to invest in.
Most people find that gold is a stable asset to invest in, but Bitcoin has way higher potential but also risky.
Which is the better investment then? The answer to this question depends on your financial goals.
Gold is a stable investment that almost guarantees a return on your investments in the long-run. Nevertheless, Bitcoin is a better investment with short-term financial gains, which could be highly rewarding. The problem is that you could potentially lose a lot of money
Bitcoin was hit by a 70% crash, and the shocking part is that everything in the market share is better than ever. On the other hand, gold is about to break out through a four-year holding resistance.
For the longest time, gold has dominated the safe asset arena, while Bitcoin was launched over a decade ago and had already massive recognition in the last few years. Bitcoin price is predicted to go up to thus increasing its market capitalization.
What Happens When Bitcoin Overtakes Gold?
So, what would it look like if Bitcoin did overtake gold in the market cap?
Such kinds of predictions are quite hard to make in spite of all the information out there. With the basic market cap calculations, nothing much is expected to change. People will always tend to diversify from one asset to the other meaning there will always be a situation when one asset is preferred more to the other.
At the moment, Bitcoin market cap is around 160 billion and for it to overtake gold it needs to get a market cap of about 8 trillion dollars. This is a huge milestone to be reached, but analyst says it’s possible within a few years.
If Bitcoin overtakes gold, the expectations are that the value of store will gain popularity, thus making the overall market to grow. People will invest in both assets, and this will benefit the overall growth of the financial market.
While market predictions are in essence just people using guesswork, some sound valuable and can be used to make observations.
The volatility of Bitcoin makes it hard to correlate its daily returns with those of other assets. It can be termed as a speculative store of value.
Both gold and Bitcoin are dependable and useful to invest in. The final decision on which one to pick entirely depends on the financial needs of the investors.
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