Gold’s Unusual Supply Squeeze Highlights Bitcoin’s Superiority: Coinbase

Gold’s Unusual Supply Squeeze Highlights Bitcoin’s Superiority: Coinbase

The coronavirus pandemic that has brought the world to a standstill has provided more perspective on bitcoin and gold and the need for a hedge against the associated uncertainty.

Yet, the flight to gold has led to an unprecedented global shortage which only proves bitcoin’s superiority as a reliable form of money to fall back on, unlike the precious metal. This is according to a recent report published by Coinbase.

Gold Squeeze Reveals Bitcoin’s Glaring Advantage Over Gold

The most trusted form of real money, gold, has been around for centuries now. It has long been deemed as an ideal store of value as it moves independently of the traditional stock market.

In the wake of coronavirus fears and the “QE infinity”, investors are piling into gold to secure their wealth. This has resulted in a global shortage of the trusty yellow metal. Coinbase published a report on May 1, titled “Market efficiency of gold and bitcoin”. In the report, Coinbase cites several publications that have recently covered the increased demand for gold and the subsequently reduced supply.

One report by the LA Times notes that the gold market is experiencing a historic squeeze as COVID-19 hinders physical trading all while demand for the metal has increased. The article explains that the shortage of gold bars has been caused by the grounded airlines amid coronavirus lockdowns and the closure of refineries.


According to Coinbase researchers, these shortcomings of the gold market have magnified bitcoin’s advantage over physical bullion:

“The recent challenges of the gold market reveals Bitcoin’s distinct advantage over gold: Bitcoin does not rely on fragile physical supply chains and is truly globally accessible.”

The report further mentioned that the disruption seen in gold’s market has resulted in disparities in the price of gold on CME’s Comex New York exchange and in London. In contrast, bitcoin’s value in terms of the US dollar has remained rather uniform across major global exchanges, save for one incident with BitMEX exchange.

Bitcoin Is Faring Well While Gold Experiences Supply Squeeze

The world is in uncharted waters amid the COVID-19 outbreak. But while gold sees a supply squeeze, bitcoin has continued to perform as it was designed with miners producing new coins every 10 minutes, Coinbase argued. Notably, bitcoin has also continued to process transactions with 99.98% uptime since its launch eleven years ago.

Moreover, bitcoin’s hash rate has remained on an upward trajectory despite the halving that’s just around the corner.  After the halving, bitcoin will become as scarce as gold -but with the added advantage of being teleportable.

Coinbase also notes that while bitcoin is quite volatile, it has performed better than gold and the S&P 500 so far this year.

The report astutely concluded that bitcoin has a significant technological advantage over gold, and it is poised to further prove itself should the current market conditions persist.

Compared to transporting, depositing, or withdrawing gold to exchange globally, Bitcoin is at a technological advantage. And if current market conditions continue, Bitcoin may yet distinguish itself further.”