Around this time last year, a comparison arose between Bitcoin and gold, with returns from the former beating those from the yellow metal for a few years running. But this year, the gold yield has hit Bitcoin without a doubt, according to data from Augmont Enterprises Private Limited, a gold trading firm.
Among other factors, some experts consider both assets a store of value. Amanjot Malhotra, Country Manager, Bitay, a global fintech company focused on crypto-assets, blockchain, artificial intelligence, IoT, etc., said that one of the most common reasons for buying both gold and Bitcoin is that they are a store of value during economic periods . uncertainties.
Gold vs Bitcoin: Total Return
While Bitcoin jumped nearly 1,300 percent in 2017-18, gold returned around 6.3-7.3 percent. Also in 2019-20, 2020-21 and 2021-22, Bitcoin gained significantly more than gold (see table). So far this year, however, Bitcoin has fallen nearly 57 percent against over 4 percent positive returns from gold.
Demand for gold was healthy this holiday season. The India Bullion and Jewelers Association (IBJA) estimates that around 39 tonnes of gold, worth Rs 19,500 crore, was sold during the two-day festival.
What the experts say
Unlike the gold industry, the cryptocurrency market lacks stability. “It (gold) has been there with us for ages; it is among the most liquid forms of assets and investments and has always given positive returns over long periods,” said Aditya Modak, co-founder of Gargi by PN Gadgil & Sons, a jewelery group.
Digital assets also carry high risk due to volatility, experts say. “Investors have already seen that (Bitcoin) skyrockets and plunges to record low levels in a short time. So looking at this, conservative investors are inclined towards traditional low-risk assets,” says Nidhi Manchanda, Certified Financial Planner and head of training, research and development at Fintoo.
But Bitcoin supporters believe the fundamentals are positive, even if disconnected from today’s price. “When we look at a few metrics like the Bitcoin network’s hash rate, Bitcoin’s adoption and the adoption of the Lightning Network, it’s clear that most of the fundamentals of Bitcoin are on the rise,” said Mohammed Roshan, CEO and co-founder of GoSats. a Bitcoin rewards app.
They also believe that the crypto winter is short-lived. “I don’t expect the price to remain deflated in the long term. Also, we must not forget that compared to other assets, the Bitcoin market is nascent and is currently affected by macroeconomic headwinds,” says Roshan.
Malhotra says Bitcoin has never taken more than three to four years for its price to recover. “This suggests that in the long term BTC can be a store of value,” he says.
