Will Bitcoin take over when gold loses its luster? | Explore the possibility of Bitcoin taking over gold as a new safe-haven storage tool

Author: Xiaowei When gold loses its glory, will Bitcoin take over? Hello, everyone, I am Song Wei. In the beginning of May, the global financial market ushered in a historic moment: the price of gold gradually rose after the previous downturn, breaking through $3,400 per ounce, and Bitcoin stood strongly above the $97,000 mark. Behind the simultaneous soaring of the two major assets, it not only reflects the game and symbiosis between traditional safe-haven assets and emerging digital assets, but also reveals the profound transformation of monetary forms and value storage methods under the transformation of the global economic order. Let’s first talk about the big brother Gold. From ancient times to the present, gold has been majestic and has always been at the top of wealth storage. It is because it is scarce, and the world recognizes its value. If you walk to any corner of the world with a gold brick, you can get real money. However, in recent years, a dark horse has emerged in the financial industry, that is, Bitcoin! Moreover, the total amount of Bitcoin is fixed, with only 21 million coins, which is different from the fact that traditional currencies can be issued additionally at will. This is like a limited edition supercar. It is naturally precious if there are limited numbers. Then the question is, which one is better for wealth storage, gold or Bitcoin? Is it possible for Bitcoin to 'ush' the throne' gold? Judging from the research report of Citibank, some interesting phenomena have been discovered. Bitcoin performs quite well during periods of rising interest rates and maturity premiums, and this time, it is often a time when gold is under great pressure. Judging from historical data, when the term premium and rate of return fall at the same time, it is the highlight of gold, because at this time, the opportunity cost of holding gold, such as no profit, becomes lower. But Bitcoin can produce the strongest returns when real interest rates rise and inflation concerns increase. It's like two athletes, on different tracks, one is getting better and better, while the other is a little overwhelmed. Take 2024 for example. The price of Bitcoin reached a maximum of US$9.6, while the price of gold remained in the range of US$1,800-2,000 per ounce for most of 2024. And, when the market is down, Bitcoin is usually in the same group as the stocks, and they fall together. But sometimes, it is particularly "personal". For example, when Silicon Valley banks collapsed, and when the bond market was turbulent at the end of 2023, everyone thought Bitcoin would suffer, but not only did they not fall, they also rose against the trend. This is like the student in the class who is usually naughty but always surprises people at critical moments, making people confused. As for gold, its response to real yields is more predictable. If interest rates fall, gold will benefit; if interest rates rise, gold will lag behind. With such a comparison, Bitcoin's performance is really a bit unpredictable. It's like a mysterious treasure. You never know what surprises you will dig out in the next second. However, Bitcoin is not perfect either. Its price fluctuates so much like a roller coaster, going to the sky and entering the ground. Today you see its upward trend and are full of joy. Maybe tomorrow it will fall so much that it makes you doubt your life. Such ups and downs are not something that ordinary people can bear. Also, the security of Bitcoin is a bit worrying, it's like you putting your money in a seemingly solid safe, but there are always some experts who can find ways to open it and steal your money. Let’s look at the regulation. Gold has been supervised for thousands of years, and all kinds of rules and systems are perfect. Bitcoin is still an emerging thing, and its global regulatory attitudes towards it are different. Some countries support it, some restrict it, and some countries directly prohibit it. Before the regulation is fully mature, it is difficult for Bitcoin to completely replace gold and become the mainstream wealth storage method. So, when gold loses its glory, Bitcoin wants to take over. Although there is a chance, the challenge is not small. It has its own unique advantages and can perform well in certain economic environments, but its shortcomings and uncertainties are also obvious. In the future, we still have to wait and see whether Bitcoin can successfully take over gold. It's like watching a wonderful movie, you never know the ending until the last moment. Maybe one day, Bitcoin will really make a comeback and become the new king of wealth! Okay, that’s all for today’s show. Thank you for watching. I am Xiaowei. See you next time! #Bitcoin#btc#gold#crypto#making money at home