Bitcoin has grown in popularity, and also its value has increased significantly; the perception that investors have regarding BTC has changed. It’s no longer just an alternative payment method, but it’s treated as a good store of value and a hedge against inflation.
Speaking of safe-haven assets, besides Bitcoin, gold is recognized as a valuable asset, especially during recessions. If you’re wondering whether you should invest in gold or Bitcoin, here we explain some of the similarities of these two safe-have assets that will help you make your decision.
What Makes Bitcoin Safe Haven Asset
Safe-haven assets are those assets that perform well in times of crisis or volatility on the market. In comparison to other assets, the value of safe-haven assets is increasing, while the other assets’ prices tend to decline during periods of instability. Safe-haven assets are treasury ETFs, bonds, and precious metals.
Bitcoin is considered a safe-haven asset because generally, in times of uncertainty Bitcoin’s price isn’t affected by the unsuitability of financial markets. As we know, it was created in the midst of the financial crisis in 2008.
As it is a decentralized cryptocurrency, this means that the price is evidently formed under the influence of supply and demand while events like recession, political crisis, hyperinflation, social unrest, or any other issues that might affect other currencies have no whatsoever impact on the value of Bitcoin.
Another reason why Bitcoin is considered a hedge against inflation is the latest bull market phase during which its value has dramatically increased from 2020 to 2021. The price of Bitcoin surged or by over 200%, and it surpassed $60,000 in March 2021. Another reason why this Bitcoin is treated as a good store of value is that, like other safe-haven assets, its supply has an upper limit of 21 million BTC.
Another reason why it’s been dubbed as the “digital gold” is its weak correlation with other assets. If you want to obtain BTC, many only trading sites offer this option. What’s more, there are automated exchange sites like Immediateedge, which utilizes advanced AI Technology that will help you potentially earn huge profits off Bitcoin’s price movements. In fact, you can make a daily profit of up to $800. You can register on this highly profitable trading platform by depositing $250.
Gold As Safe Haven Asset
This is one of the most sought-after safe-haven assets, especially because it’s expected to appreciate in value during times of instability. Even if its value stays the same, you will still be at an advantage because the price of other assets still tends to go down in value when there is any kind of crisis. Otherwise, the value of gold has been rising since 2000; the only time its value has declined was when the global stock markets crashed.
Another reason why the value of gold is rising is its scarce supply, similar to Bitcoin. Also, typically, the supply stays at a disproportionately low level compared to the demand. Another similarity is that both Bitcoin and gold are highly liquid assets that can be exchanged for fiat currencies.
When it comes to the similarities between Bitcoin and gold as safe-haven assets, even though we know that BTC has a limited supply, we still can predict when all of the tokens will be mined as there is a stable rate at which new BTC are added to the network.
In contrast, there is still approximately 20% of the total supply of gold left to be mined, but it’s difficult to say when we will reach that point. In conclusion, Bitcoin and gold or are valuable in their own right and based on your financial goals and plans, and you can decide whether to include both Bitcoin and gold in your portfolio.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.