This year has been unexpectedly transformed by the Covid-19 pandemic, which turned the conventional stream of economy upside down. While the economic projections before the pandemic were mostly positive, the whole focus now sprawls on how to recuperate from the loop formed by the crisis that has gripped the entire world.
Bitcoin, the OG among other cryptocurrencies has exhibited a lot about itself amid the pandemic. First, not acting as a safe haven in the face of the crisis, it rather proved a high correlation with the S&P 500 index. Secondly, a gargantuan spike in prices which the populace expected to come after the third Bitcoin halving has not taken place yet – possibly driven by the low market confidence in the aftermath of the pandemic.
The investment realm has evolved, including core assets too. Vectors have now shifted to stocks, corresponding to the new lifestyle dictated by the post-pandemic reality, such as remote working technologies, online shopping, e.t.c. Alternative investments like gold also gained momentum, mostly because of their resistance to inflation and other market tendencies.
Bitcoin and gold: price analysis
Since the start of the year, Bitcoin has been through peaks and valleys. Driven by the highly-anticipated halving in springtime, its price started ramping up all the way through the winter period, until the pandemic effect struck the markets. Then, Bitcoin faced an unprecedented price crash to $3,600 in March, which was the highest single-point collapse in the last 3 years. Further on, Bitcoin started a gradual recovery, which eventually brought it to a year-to-date high of $10,230 on June 1.
Gold prices have been following the same general trend. Showing a strong growth potential at the start of 2020, it later on sharply dipped to the year-lowest $1,300 price level in mid-March as a part of general negative consumer sentiment, further on driving a long and strong recovery, which eventually helped it to achieve the seven-year high of $1,630 on May 18.
In rough terms, both Bitcoin and gold are following the same common trend of the S&P 500 – which means they still find themselves economically-liable. However, with other things being equal, they may still count on better growth potential in the times of economic turmoil, as the ‘decentralized’ nature of both assets, as well as their production and obtainment, make them less reliant on common evaluation factors.
Although according to a Bloomberg report, both gold and Bitcoin are expected to outperform the traditional market, Bitcoin is still considered as better storage of value.
Why? The answer reclines in the technological foundation of cryptocurrency – blockchain, which allows greater transparency, easy storage (Gold is difficult to store), and one can easily grab a stake even with the lowest share of actual Bitcoin (gold is more difficult to subdivide). Combining these factors all together, Bitcoin just could have secured itself a ‘digital gold’ status.