Quick take:
- Bitcoin replacing gold is occurring at a fast rate as investors divert funds ‘to where it is treated best’
- Gold still maintains its place in jewelry and coin collections, but Bitcoin is replacing it as a store of value
- BTC’s volatility and ETF flows indicate that Bitcoin is in the early days of gaining against Gold
- The amount of Bitcoin leaving crypto exchanges is a sign of increased demand
The team at Bloomberg has released their April 2021 Crypto Outlook report in which they point out that Bitcoin replacing the old guard of gold as a store of value, ‘is more sudden than gradual’. According to the report, money usually flows to where it is treated best and Bitcoin has the upper hand when compared to Gold.
However, the shift is not necessarily bearish for Gold as the precious metal is still valuable as explained below.
Gold will always have a place in jewelry and coin collections, but most indicators point to an accelerating pace of Bitcoin replacing the metal as a store of value in investor portfolios. Bitcoin’s fundamental and technical underpinnings are improving while gold’s deteriorate.
Bitcoin Leaving Exchanges is a Sign of Increased Demand
2020 and this is year is particularly important for Bitcoin as its reducing volatility and ETF flows indicate that its price is in the early days of appreciating against Gold.
Furthermore, the demand for Bitcoin as a store of value is best exemplified by the amount of BTC leaving exchanges. The amount currently available for trading is low on exchanges and hints of further price appreciation.
Bitcoin is now a Risk-Off Asset
The report goes on to point out the recent Tesla purchase of $1.5 Billion in Bitcoin as a turning point for BTC shifting the digital currency to a risk-off asset.
The world’s largest automaker by market cap – Tesla – allocating some of its wealth to Bitcoin may indicate an inflection point favoring the crypto. Rising equity riches partially diversifying into Bitcoin is logical, in our view.
