Gold vs cryptocurrency: which one should you buy and why?
Cryptocurrencies like Bitcoin and Dogecoin have created a lot of buzz around the world lately, and many Indian investors have jumped on the bandwagon as well. Meanwhile, gold continues to move sideways.
Recently, Bitcoin has been accepted as a store of value investment because, like gold, it tends to function as a hedge against currency devaluation and volatility, according to crypto market watchers.
Gold experts frown at such claims. “The charm of gold has not diminished at all and it has, in fact, increased after generating double-digit returns over the past year,” said Anuj Gupta, vice president – Commodities and currencies, IIFL Securities.
Gupta agrees that Bitcoin and gold have an inverse relationship with the US dollar and are often bought to protect against the greenback.
With the advent of corporate investors such as Elon Musk, the cryptocurrency market is no longer the preserve of only technologists and millennials, who were charmed by it 10 years ago.
Kshitij Purohit, Lead Commodities & Currency at CapitalVia Global Research, said gold is obviously the first choice for the Indian investor as it has a long history as a medium of investment in addition to its use as jewelry. , while cryptos are new and there is still no clarity on this. their rules and regulations. “It is still not widely accepted in India,” he said.
Others believe the cryptocurrency frenzy poses a major threat to gold. “Gold has lost ground as investors have flocked to cryptocurrencies to take advantage of the momentum in trading. Cryptocurrencies definitely have more appeal,” they said.
Those who support virtual currencies strongly adhere to it. They find economic value in blockchain technology, which is increasingly common. Some have dubbed Bitcoin “ digital gold ” due to the coin’s rarity.
Monark Modi, CEO of cryptocurrency trading platform Bitex, said that before investing in a virtual currency, one should check the purpose that the cryptocurrency aims to achieve, its vision and the community that it aims to achieve. ‘she serves.
“Bitcoin has wide acceptance due to its practical value and adoption by various international entities and institutions,” he said.
The rise in gold prices has been very impressive over the past 50 years, accompanying inflation and reflecting rising production costs as the mines sink.
By comparison, Bitcoin has witnessed a mind-boggling rally over the past decade, from $ 0.08 when it launched in 2008 to trading above $ 60,000 until recently.
However, the corrections in this cryptocurrency have been equally large and further sharp swings cannot be ruled out.
“Cryptocurrencies have provided better returns than other asset classes, but high volatility should not be overlooked,” Purohit said. “Aggressive traders can opt for crypto investing for better returns,” he said.
Other experts say cryptocurrency can indeed be a good hedging option. But the brutal volatility, lack of pure fundamentals and the aspect of anonymity add to more speculative bets, making it less secure than gold.
“There is no concrete fundamental support for Bitcoin, relative to gold,” said Gupta of IIFL Securities.
“So traders use Bitcoins primarily for trading and speculation. But gold is still for investing,” said Purohit of CapitalVia. He said that you have to understand this risk appetite before making a bet in the crypto market.
“Higher returns always seem lucrative and attract speculation on assets, but higher returns always come with higher risk,” he added.