Gold vs. Bitcoin Investment: The Two Hedges Against Inflation

Investors traditionally hold a part of their portfolio in precious metals like gold because it offers a hedge against the loss stocks might need to take during an economic downturn. Though there is no denying the effectiveness of this method, a new and digital alternative is challenging this traditional method. Bitcoin is coming up as an important asset for investors because of its reliability as a hedge against inflation. So, before you decide between gold and bitcoins, read on to know a couple of facts.

Bitcoin: The digital asset

Bitcoin was launched in 2009, and the decentralized technology brought in a new era in investing and finances. In the initial days, the digital currency only attracted a handful of niche enthusiasts. In 2010, those early speculators found that the bitcoins that they had earlier bought for merely a fraction of a cent was now running at $0.09/bitcoin. Thus, large-scale bitcoin mining pools and farms started coming up, and crypto exchanges were opened.

When the pandemic started shutting down the world economies in 2020, investors and speculators found out that the value of bitcoin was not falling alongside the stock values.

Gold bars are a popular investment option for those seeking to diversify their portfolio and hedge against inflation, currency devaluation, and economic uncertainty.

As they began pouring more capital in it, institutional investors kept on finding ways to establish investment funds and investments from it. Interested bitcoin traders and investors turned to reliable platforms like Bitcoin Evolution to start investing. Gradually, the price of bitcoin soared and reached an all-time high in November.

Gold: The conventionally reliable asset

Historically, gold performs well at the time of market correction as it holds its value. The price continues to be steady. After that, it continues to rise when the investors go from stocks to gold in case of a looming recession. Thus, gold has always been a reliable hedge against recessions or market corrections.

At the time of the pandemic, every investor did not turn to bitcoin. Many of them went by conventional strategies and chose gold. Thus, gold prices went from less than $1,300 in late 2019 to almost $2,100 in mid-2020. Through last year, the economy recovered slowly and the gold prices dropped. However, it kept averaging higher than those pre-pandemic recession level.

Major differences

Gold has been dominating the economies for thousands of years as a way to hold wealth and exchange it. Bitcoin came around in 2009 and received wider recognition a few years later. Here are the key differences between the two:

Whether you choose gold or bitcoin depends on your investment goals, risk tolerance, and market speculations. You need to talk to a financial advisor and a bitcoin broker to get a better understanding of this matter.