Earlier this week, we saw an interesting correlation between corresponding parabolic arcs for both Bitcoin and gold prices, as trade tensions and other factors continued to depress the equity markets.
However, some fans of Kruggerands and boullion are presumed to be livid about some of the comparisons being made between digital coins and precious metals.
One such gold bug, Peter Schiff of Euro Pacific Capital, spoke out according to a NewsBTC article today:
“The idea that Bitcoin is just like gold is utter nonsense. Bitcoin is nothing like gold,” he tweeted. “It’s fool’s gold. There is not a single use case where Bitcoin can be used as a substitute for gold. Plus the gold price never falls by over 25% in less than 24 hours!”
Indeed, as Schiff notes, gold is not volatile in the way that Bitcoin is volatile.
Investors and institutions of all stripes have long pointed out that one of the major liabilities of cryptocurrency is the volatility inherent in the market. By contrast, gold is seen as a stable alternative for investment when traders see big changes in equity, commodity and bond values. It’s something that humanity has always seen to have inherent value, back to the time of the Ark of the Covenant and beyond.
That being said, some traders aren’t scared enough to try to put their money into assets that don’t move. The alternative strategy is to put money into something that’s slowly coalescing into a higher value.
When we see Bitcoin ATMs open up, when we see government and private sector businesses embracing Bitcoin payments, when we see all sorts of venture-capital plays focusing on cryptocurrency, a certain set of traders takes that as a pretty solid indicator that they can beat the classic markets, which are shivering and shaking from protectionist activity, by going into crypto, at least in the short term.
Then the buy an holders are looking for solid growth over time. Maybe at a certain future date they’ll take profits back out of crypto and put them back into gold – who knows? No one would really argue with Schiff’s comment that precious metals are less volatile – but that’s not the only factor in today’s trading strategies.
As for Bitcoin’s loss – yes, that 25% number is big, but BTC is still towering above where it was a few months ago, so hater comments notwithstanding, traders who bought in around $4,000-$5,000 are pretty much able to, as Taylor Swift would say, “shake it off.”