【Gold and Bitcoin: The Battle of Hard Currencies in Times of Uncertainty】
In the face of economic uncertainty, inflation, and geopolitical changes, the 'hard currency' status of gold and Bitcoin has sparked heated discussions. Gold has surpassed £2,270, and Bitcoin is nearing £60,000, becoming safe-haven assets for investors dealing with volatility, particularly as market anxiety intensifies. So far this year, gold has risen over 38%, while Bitcoin has surged over 115%, both reflecting the growing demand for hedging.
Despite gold's centuries-long stable history, Bitcoin attracts younger investors due to its convenience and portability. Noted investor Palihapitiya believes Bitcoin will become a hedge against inflation over the next 50 to 100 years, in contrast to Schiff's views on the value of gold.
Academic research also supports the hedging functions of Bitcoin and gold. Research by Bouri et al. shows that Bitcoin can combat currency depreciation like gold, while gold's supply steadily increases with mining, Bitcoin, on the other hand, has a cap of 21 million coins and halving mechanisms, adding deflationary characteristics.
As both continue to rise, investors face a choice: to opt for the timeless gold or the scarce Bitcoin. This battle of 'hard currencies' has yet to reach a conclusion, but both have become hedging options in uncertain times, potentially indicating a shift in the market.
