This year has been very volatile for both traditional, and crypto markets as the effects of the Covid-19 pandemic continue to hit economies hard globally.
However, the recent rally in crypto markets that has driven BTC to $12k has caught the attention of institutional and retail traders who were previously skeptical about cryptocurrencies.
Moreover, as inflation grips many economies as a result of government stimulus policies that pump money into the global economy, many ordinary folks are looking to gold as a hedge due to its scarcity and resistance to inflation.
In this article, we look at how BTC has performed against traditional assets such as gold, oil and precious metals.
Bitcoin Outpaced Gold In Q1 of 2020
In the first four months of 2020, BTC managed to register more gains than those seen in gold, silver and crude oil. The cryptocurrency rose by almost 33% to become the top-performing asset of Q1 2020.
Comparatively, gold only surged by 13%, while silver plunged by about 14% and crude oil lost over 70% in value as seen in the chart below.
Since the Mid-March market crash that saw global stocks endure their worst trading sessions in years, BTC has appreciated higher than all other traditional assets as it gains prominence as a store of value.
Despite the said crash also wiping out more than $4K from Bitcoin’s value, the crypto asset quickly recovered in two weeks as investors looked to secure their holdings in safe-haven assets.
Moreover, the digital asset soared above other assets as individuals increasingly invested in BTC ahead of the May Halving event.
BTC To Mature into a Gold-Like Store of Value
Bitcoin has also outperformed gold and precious metals for the first half of 2020, leading to Bloomberg to suggest that BTC will become the digital gold of the year.
As per their report, this year marks a critical test for Bitcoin’s evolution into a quasi-currency like gold. The financial analysts also added that BTC could transition from a risk-on speculative asset to the crypto market’s version of gold.
The sentiment of BTC’s maturation into digital gold in terms of its attributes as a store of value looks strong as per data from Messari, a crypto analytic firm.
Messari shared the chart below, highlighting that in the first half of this year, BTC gained more than 27%, outperforming precious metals that include platinum gold and silver.
Holding Both Physical and Digital Gold Could Serve Investors
Despite outperforming other traditional assets, BTC’s rally higher over the last 12 months experienced high volatility. The crypto’s price saw constant upticks and crashes, while gold has tracked a steady climb.
This historical volatility in BTC markets led David Lifchitz, partner at cryptocurrency firm ExoAlpha, to suggest that investors should view both gold and BTC as complementary investments other than competitive ones.
Lifchitz believes that holding “digital and physical gold together” could develop a better risk-return profile than holding either of the two assets separately.