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In the modern economic era, gold, as an asset and a place to invest money, has many rivals, and the most significant one is Bitcoin. But looking back on the long and shiny history of gold, it is still a haven for preserving wealth. This article aims to compare investing in gold with investing in the cryptocurrency market, particularly Bitcoin, and concludes with a long-term gold price forecast.

For Gold, Against Crypto

Gold as a haven

The U.S dollar is one of the world’s reserve currencies. Trades in the cryptocurrency market are made, directly or indirectly, via the U.S dollar’s cryptographic representation, Tether. The problem here is that when the value of the U.S dollar falls, people tend to invest their capital elsewhere, and some choose the cryptocurrency market, a market with a tender and, at the same time, volatile nature. However, other more conservative people tend to buy gold, an asset that has stood the test of time and has a limited supply, and therefore the gold investment is the safer choice here.

Gold as a stable asset

There are enterprise traders (more popularly known for whales) in the cryptocurrency market that hold large amounts of an asset, and their positions create volatility in the market. While sudden changes of direction in the price movements of assets are typical of the cryptocurrency market and necessary for the perpetuation of the market, the gold market necessitates a steady trend. This is because most governments back their currencies with their gold supplies, and if the gold price does not follow a smooth trend, so does the fiat currencies, which would be a serious threat to any state’s economic system. Thus, if you invest your money in the cryptocurrency market, you have to deal with the instability risks of the market, but if you invest your money in gold, you can preserve your wealth better.

Gold as a practical asset

In terms of accessibility, gold and silver have been available for all people with any economic and educational status since the dawn of early economies. However, on the other hand, cryptocurrencies, practical as they might be, are not available for all people because they require specific technological knowledge. An old timer or someone who does not have easy access to the Internet would probably prefer to buy gold.

Gold as a government-supported asset

While gold is a stabilizing element in governments’ economic systems, Bitcoin and the blockchain system, in general, can marginalize the governments’ role as a central and authoritative entity. This can result in hostile legislation against cryptocurrency trading, which will bring about the end of the cryptocurrency market. For instance, China, the second-largest economic world power, banned trading cryptocurrencies, resulting in a sudden fall in the cryptocurrency market. This is why your capital is safer if you keep it in gold; after all, the gold always has a buyer, the government and the large enterprises.

For Crypto, Against Gold

Bitcoin as a promising asset

Bitcoin is known for digital gold and has managed to achieve 100x improvement over gold, reaching the value of $63000 per block in May 2021. On the other hand, although it has undoubtedly gained in value over centuries, gold has not improved as fast as Bitcoin. Moreover, frequent dramatic volatilities have accompanied Bitcoin’s price increase, an opportunity for the risk-takers to accumulate and raise their capital.

Bitcoin as a sophisticated asset

As a crypto trader, one has to develop a winning strategy based on technical and fundamental analysis of the market. Therefore, engaging with Bitcoin and the cryptocurrency market, in general, necessitates technical education, which in turn requires a lot of time. On the other hand, trading or holding gold does not require intensive market analysis -and even though you may not take as much advantage as you can take from the crypto market in the short run- and at least you are sure that your capital retains its value.

Bitcoin as a future means of payment

Payments are usually made with fiat currencies that are backed by gold one way or another, which is why their value follows a relatively steady trend. However, you cannot easily and directly trade with gold, and very few governmental or illegal trades transfer gold as the means of payment. Conversely, cryptocurrencies are easily transferable, and some progressive international firms have offered to accept payments in Bitcoin. Elon Musk, Tesla’s CEO, has been playing an active role in promoting crypto trading.

Future Price Prediction

The current (10/2/2021) market price of Bitcoin is $45,700, and the future fluctuations in the asset’s price will continue to ascend until it sees a height of $100,000, and then through market correction, the price will fall back to $50,000. This would rescind the idealistic horizons predicted for Bitcoin, and by the decline of Bitcoin, it would be time for its physical and traditional counterpart to gain in value.  As a matter of fact, all the reasons behind the fall of the cryptocurrency market will function in a parallel manner to support and increase the price of gold. Based on our fundamental and technical analysis of the gold chart, we concluded that the gold price would decline to $1,500 per ounce and then rise to 3,000. Therefore, it is estimated that by 2030 the price of gold can increase to $5,000 per ounce.

Final words

Although Bitcoin has enjoyed a sharp price increase, the asset still has a long way to prove longevity.  Gold, on the other hand, has been used to hedge investors’ capital against inflations and financial crises, and even though its value has increased throughout history, its pace is not as fast as Bitcoin. Also, both gold and Bitcoin are great portfolio diversifiers and can hedge the investors’ capital against fiat currency inflations.

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Fiat currencies issued by different governments are constantly competing, and their value fluctuates with major political events such as elections or natural disasters like earthquakes or wildfires. Therefore, as an investor, you should hedge your capital against fiat currencies’ price fluctuations. Gold is the first asset that has been used to hedge investors’ capital against such fluctuations, due to its rarity and the fact that it has always had an ascending value in history. Bitcoin, famous for digital gold, is the choice of the more risk-taker traders who have a knack for market analysis and can benefit from the cryptocurrency market fluctuations. Moreover, Bitcoin is more easily transferable than gold but buying and holding gold has lower risks. However, Bitcoin cannot surpass gold in the market cap in the long run because of the fundamental issues mentioned in another article.

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