Amid ups and downs in both equities and crypto, having both assets in your portfolio could be the way to bolster security against falling markets. The recent bullish season on the crypto market has been luring some investors to shift their assets from physical gold into what is believed to be Gold 2.0.
By the end of last week, the gold price hit an 18-month low, marking last July as a consecutive month of falling prices, the longest streak for gold since 2013. Experts point out that the reason behind the price drop is falling demand around the globe and strong economic growth in the US over the first half of the year.
On the other side of the spectrum, Bitcoin has been going through a bullish season, reaching over $7,000 on Friday, ending on an optimistic tone the rollercoaster ride that has been bitcoin value so far this year. In his recent interview with CNBC Gabor Gurbacs, director of digital asset strategies at VanEck/MVIS, said ‘Bitcoin is used as digital gold today. It’s a de-risk asset. Basically, if someone wants to outlay systematic risk, then one would go to access gold or digital gold (bitcoin),’ he added.
While some sceptics still highlight the volatility of the crypto market, we believe that with the current low mood on the equities market, investors could look towards crypto with more interest.
A hedging strategy of both crypto and gold investment could be the solution.
Bitcoin can actually be good for gold, believes Online Blockchain CEO Clem Chambers.
Even for the most traditional investors, there are significant advantages to investing in crypto, believes crypto master Clem Chambers: “Gold and Bitcoin are both assets used as a store of wealth in troubled times. Bitcoin is better than gold as gold is simply not safe to keep. You are easily robbed of gold, but a cold wallet is much hard to steal.”
Cryptocurrencies are indeed easily transferable abroad, securely stored in a mobile wallet, and can be traded to other fiat currencies as needed. “Bitcoin has a massive upside against gold.”
However, it does not mean that you need to bet all your coins on Bitcoin. In fact, Chambers believes that Bitcoin can even be beneficial for gold, that the two assets complement each other, as such offering more options to store wealth and working together as insurance assets against times of financial turmoil.
“Assets… you can’t have too many of them. New media does not destroy old media, in fact new media generally creates even more demand for the established media. TV didn’t destroy the movies, comics didn’t destroy books, paperbacks didn’t destroy hardbacks, the internet didn’t destroy computer games. The same goes for Bitcoin and Gold,” says Chambers.
“Bitcoin is new wealth in the same way as a new gold mine would make the world wealthier. There is no reason that Bitcoin can’t be worth what all the gold on earth is, or much more. Bitcoin has a better use case than gold but the use case of Bitcoin is not exactly the same as gold and will not make it obsolete.”
Bitcoin 2.0: Crypto follows Gold as insurance again falling markets
Crypto has garnered some support among asset managers as well, who are enthusiastic about including cryptocurrencies in investments — along with gold, which has always been a component of refined portfolios.
Amanda Van Dyke, Fund Manager at South River Asset Management believes in smart investment strategies that can edge the protect from usual volatility in the market. Gold and Bitcoin are her preferred assets: “One of the many functions of gold in our financial system is as insurance again falling markets, currencies, inflation, and frankly just world economic chaos. A small part of most sophisticated investor portfolios has always included gold. In this new economic landscape Bitcoin and Crypto currencies are also entering that space. They like gold serve as an alternative to the market, a bit of insurance, slightly outside the general financial system.”
It is important to remember that bitcoin is just one coin in the sea that is the cryptocurrency market. There is a wide variety of other tokens being traded on the crypto exchange, many with plenty of potential. Do your research, look for alternative tokens to invest in, and find your niche.