Bitcoin surpasses gold in battle for safe havens

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As the price of Bitcoin (BTC) moves closer to $ 59,000, its value against gold approaches new all-time highs, perhaps hinting at the emergence of a new preferred store of value.

Measured against gold, the price of Bitcoin hit 34.94 ounces on Tuesday. The BTC-gold benchmark peaked at 35.35 ounces on March 13 as Bitcoin surpassed $ 61,000.

Bitcoin continues to outperform gold by a significant margin. | Chart via BuyBitcoinWorldwide

The value of Bitcoin against gold has more than doubled in the past three months and is almost seven times higher since October 2020.

Gold futures, meanwhile, plunged below $ 1,700 per troy ounce on Tuesday on the Comex division of the New York Mercantile Exchange. The price peaked at $ 1,676.50, marking a new three-week low. Since peaking above $ 2,050 per troy ounce in August 2020, bullion has corrected nearly 18%.

2020 was a big year for gold as the yellow metal set new all-time highs in all major currencies before reversing $ 2,000 per US dollar for the first time. Bullion ended the year with a gain of around 22%. Still, that pales in comparison to Bitcoin’s 265% annual return.

With the recent $ 1.9 stimulus package fueling inflation fears, assets like gold and Bitcoin should, in theory, perform well as investors are hedging their bets against the falling dollar. However, the recent rise in bond yields may have taken some of the shine out of gold.

Others, even some prominent analysts like Bloomberg’s Mke McGlone, believe gold is losing ground to Bitcoin in the battle for safe havens. Earlier this month, McGlone tweeted:

“Gold will always have a place in jewelry and coin collections, but most indicators point to an accelerating pace of Bitcoin replacing metal as a store of value in investors’ wallets.”

Even JPMorgan, an organization that has long been critical of Bitcoin, has claimed that digital currency will consume some of the market share of gold. “The adoption of bitcoin by institutional investors is only just beginning, while for gold, its adoption by institutional investors is very advanced,” JPMorgan strategists led by Nikolas Panigirtzoglou said in a December 2020 report. “If this medium to long term thesis proves correct, the price of gold would suffer from a structural headwind over the next few years.”

Bitcoin’s digital gold narrative continues to strengthen after the halving. The quadrennial deflationary event, which last occurred in May 2020, reduces the amount of new Bitcoin that comes into circulation after each block is mined.