Digital currencies, dubbed the “digital gold,” have become very popular over the last several years. Although the price of some of these digital assets has declined over time, resulting in a turbulent market, it now looks to be stabilizing. However, it’s worth considering if digital currencies have an impact on the metals industry, particularly gold. The meteoric rise of cryptocurrencies during the previous years has piqued investors’ interest. Investing in cryptocurrencies is sometimes compared to investing in gold. Despite several superficial parallels, we think cryptocurrencies and gold are practically and fundamentally distinct. 

Our findings show that:

*Gold demand comes from a wider range of places.

*Cryptocurrency supply and possession are more centralized.

*Cryptocurrencies have mostly improved portfolio operation through profits, but they have also introduced substantial risk.

*Gold is a slightly elevated liquid resource, and increasing gold shares in cryptocurrency portfolios can be beneficial.

This information alone cannot predict how the arrival of cryptocurrency would affect the metals industry. The gold value may change due to the introduction and growth of new digital currency varieties or value increases. On the other hand, the advent of such digital currencies has a long and short-term impact on metals? That’s a challenging topic to answer because many people debate the overall impact Bitcoin will have on established markets. This issue can be examined in two ways:

Short term

Due to the influx and enthusiasm of ordinary people to buy cryptocurrencies and convert gold into crypto, the price of gold may decrease for a while. This price reduction is up to the approximate price of $ 1400 or 1500 per ounce of gold. This enthusiasm can come from the rise in the value of cryptocurrencies market that is showing up until more than six months later. So none or mid-professional market participants tend to invest in this industry to gain some profit.

But that is not the end of the story; let’s see what will happen in the long term.

Long time

By 2022, crypto frustration will increase due to events such as severe and deadly fluctuations in the crypto market. In fact, the price of gold will have a sharp rise when there is concern or stress, or in other words, a collapse in the financial markets. Thus, the cryptocurrency market will experience a collapse in 2022. This can be expressed in another way; In fact, from today (October 15, 2021) until more than six months, despite the fluctuations, the crypto market will grow well. This means that the capital and liquidity of the market, which is currently $ 2.5 trillion, will increase significantly.

In general, in 2022, due to the decline in the value of the crypto market and people’s disappointment with it, we can say that the price of gold will rise.

Final words

Finally, there are a variety of methods in which cryptocurrency could have a minor impact on gold value. Digital currencies are still battling for legitimacy as a novel industry, and their future status in the financial markets is undetermined. However, any slight or significant change in the value of the cryptocurrencies market or the interest rate can cause a considerable effect on the gold industry. 

Meta description: Both cryptocurrencies and gold have a key role in the market, so any fluctuation in the former’s price will cause a change in the value of the latter.