Only few months back, bitcoins were termed as the new gold as it surpassed the value of gold. But, currently, the token has suffered a huge rout in a forthnight and has eroded drastically both in value and market cap across the cryptocurrency space.
Further down, today it hit a level last seen in November 2017 falling below USD 10,000 on the back of a likely bubble burst in the vitual currency and clampdown across the globe.
Now, here is a take on which of the two asset class is most likely to provide you with gains:
Gains in bitcoin vs gold
Bitcoin and gold both had a tremendous run up in the year 2017 which saw the token surge in value from below $1000 at the beginning of the year to $20,000 on some of the global exchanges. Gold too in the international market fared well with returns of close to 13% buoyed by favourable global cues.
In India, bitcoin returns were more or less at par with international returns but gold did not provide massive gains due to high liquidity which made its way in the equity market driven by the euphoria mainly due to good returns from it.
Volatility is not a factor to fear in case of gold that will more likely remain range bound unless reforms produce some results otherwise.
While the year 2018 has already begun as a terrible year for bitcoins with crackdown across countries like China, mainly due to fears of investor losses and even concerns that illicit money practices may be indulged in with it.
Hedge or a safe haven asset
While gold is a safe haven against all economic and geopolitical risk and protects against uncertainities in other asset class by preserving the value in it, the case doesn't holds true for bitcoins.
In fact, it tends to be far more volatile than gold, which is why it cannot be given the tag of a safe haven asset.
Gold and bitcoins are even comparable
As they can be minted only to an extent, bitcoin experts have predefined the threshold limit for its minting. Also, demand and supply, the two market forces determine each of their prices.
Seeing all the above pointers and the technical backdrop of bitcoin which needs acute alertness as the same provides a security key when invested in needs to be kept intact and also the fact that bubble in it which is expected very likely can burst at anytime without prior notice even tomorrow. So, better you choose the conventional yellow metal over gold.
More so as reiterated by experts, the easing of liquidity is likely to push up gains for the Indian consumer of gold in the next half of the calendar year if not in the first half.