As the dollar struggles and weakens due to the devastating blow dealt by the pandemic, there’s a battle going on between Bitcoin, gold, and silver for the ideal store of value. By comparing year-to-date performance alone, the cryptocurrency’s ROI nearly matches silver and gold’s combined returns. What does this mean for the crypto market moving forward? Will these assets soon stand toe-to-toe, respected alongside precious metals as potential safe-haven assets?
Hard Money: The Dollar’s 2020 Demise Prompts Precious Metal and Cryptocurrency Bull Run
Although the trend slowly began back in 2019, investors doubled down in 2020 moving money into gold and other safe-haven assets fearing the worst ahead for the economy. This started long before the pandemic hit, due to increasing political and trade tensions between the US and China.
That situation took a pause to focus on the pandemic but is still ever-present and potentially coming to a boil soon. Further uncertainty around the presidential election has the dollar at its weakest point in years.
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And although the greenback looks poised for a short-term recovery, long-term, economists see it losing its global reserve currency positioning.
With the dollar at risk of losing the throne and money supply being printed to combat the economy from falling further, has turned investors towards hard assets. Since the stimulus efforts first began, precious metals and cryptocurrencies have exploded in value.
BTCUSD Versus XAUUSD Versus XAGUSD Comparison Chart | Source: TradingView
YTD Performance Proves Bitcoin Is Fastest Horse In Face Against Gold and Silver
A modern-day gold rush is taking place, but as investors run into supply and storage issues with gold bars and silver bullion, savvy investors are increasingly turning toward Bitcoin. A security situation in Hong Kong has made holding gold especially risky, harming its use as a safe haven for wealth.
Reasons like what’s brewing in Hong Kong has caused more investors to seek out digital tokens backed by the commodity. Growth in this category has also benefitted from the recent precious metals boom and tight supply.
But in the end, Bitcoin is the better asset as it was designed from scratch to already include these important attributes.
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Making Bitcoin even more valuable than its non-physical form, is the fact the asset is hard-coded so that only 21 million BTC will ever exist. This limited supply spread across just $200 billion in market cap has resulted in a price of $12,000 per BTC.
The gold market cap is worth $11 trillion. The same value in market cap spread across Bitcoin would result in a price of nearly $500,000 per BTC. The amount of money to move the needle significantly in Bitcoin has earned it the title of the “fastest horse in the race against inflation.”
The asset has also proven the claim recently with its year-to-date performance. Bitcoin has grown by 64% since 2020 first began. Meanwhile, gold is up only 28% comparison – even though the asset set a new all-time high record this was all the asset could muster. Silver has fared better, leaving 49% still on the table for year-to-date ROI.
Whether its BTC scarcity or investors realizing that its the better store of value, it has already proven it is the best asset to hold in 2020 in terms of returns.
Featured image from Deposit Photos.