Trading Tips with PrimeXBT: Gold vs. Crypto—Which Way to Go

Shifty sentiments in crypto can impact price-developments that can drive capital away to alternatives such as gold, reading from historical developments. However, as the investment world leans on technology and digital store-of value assets emerge, is gold still a worthy investment?

Bitcoin’s performance over the last decade has been exemplary, massively outperforming gold and quite literally, all traditional financial instruments if ROI guides. Still, crypto investment dilemmas such as bitcoin vs. bitcoin cash supremacy as seen in leading trading platforms such as PrimeXBT exists. From a neutral’s lens, this offers sufficient proof on the level of diversity and, thus, opportunity in crypto and how the industry has evolved, for the better, over the years.

Volatility in crypto could be tied to the hype, a factor specific to the industry. Effects of the so-called FUD and FOMO in crypto, for instance, saw the Squid Token rise to over $2.8k before rapidly tanking to below $1 in days, hurting investors and damaging crypto’s reputation. Typical of financial markets, unexpected value erosions often push market participants to the edge, triggering massive sell-offs, and blocking capital investments in the sphere. 

For this volatility, governments are actively monitoring crypto-assets. Earlier on, the U.S. SEC said crypto prices were heavily manipulated and have since been forwarding policy proposals to enhance transparency all without muzzling blockchain innovation. 

What Is The Future Of Gold?

Gold is on shaky grounds, at least from some rough estimates. For what’s there, gold prices could plateau and underperform crypto assets--not the news expected by investors. 

In 2020, gold prices as seen in PrimeXBT rallied to around $1.8k in 2020--when the world was grappling with the COVID-19 pandemic and the world’s economy in tatters. It has since dropped and could be pinned at current price ranges for an extended period. 

These misty figures could point to falling confidence in gold as a store-of-value and the rise of alternatives which are more fluid, existing in the digital realm. Gold—being at the forefront of economic turnarounds, especially in the developing world, will however, become a good inflation hedge as global economies bounce back. 

Is Crypto the Future?

The past decade has been great for crypto, as evidenced by impressive returns posted by traders in PrimeXBT.  In two years from early 2020, Bitcoin prices more than quadrupled, rallying to peak at over $68k in mid-November 2021. Compared to gold, which took decades to reach all-time highs, crypto's performance is unprecedented. 

Nevertheless, though gold might have a poor run at some point in the future, it is a physical asset. Crypto, especially Bitcoin, solely exists on trust with no solid backing, meaning its valuation and longevity is tied to the availability of the next innovation presenting better features with robust store-of-value mechanics. 

Still, there are encouraging developments. For example, the crypto infrastructure almost entirely existed in China before 2021. However, this fast changed when government officials began cracking down on crypto businesses, forcing crypto miners out of the country--a move which saw prices tank in mid-June 2021.

Additionally, there are observable moves, especially in India where the RBI has been wavy, issuing mixed signals affecting crypto businesses in the second most populous country in the world. In all, crypto and blockchain regulations are critical--and necessary.  It would, without a doubt, affect the medium to long term trajectory of Bitcoin and crypto prices as the world becomes more receptive.

The situation could be even dicey as stiff competition with state-backed central bank digital currencies might also have some bearing on adoption and even slice up a significant portion of stablecoins in the days ahead. China’s PBOC is at an advanced pilot stage and set to launch the Digital Yuan in 2022,a move that sets precedent for central banks, across the globe, to follow.

On a Positive Note

Nonetheless, crypto is gradually becoming a household name while many businesses integrate this disruptive technology in their operations. 

Notably, blockchain and technology companies looking to deploy their metaverses will, apart from NFTs, fuse cryptocurrencies for a functional play-to-earn ecosystem, benefiting users. Over time, NFTs and game tokens would probably be the store of value of digital creations such as images, game heroes, and entire lands in the metaverse.  

Additionally, governments are looking at cryptocurrencies as a vehicle for quick remittance as in the case of El Salvador. President Nayib Bukele’s government has been doubling down on Bitcoin, buying the dips as they also plan to issue a $1 billion Bitcoin bond. All this time, they are holders of gold, using the yellow metal as another means of storing value as the country recovers from the effects of the COVID-19 pandemic. 

While gold and crypto offer their advantages, proper regulation would fast-track the adoption of Bitcoin and digital currencies as the latter is here to stay. Over the long haul, there would be a win-win for both assets for a mutually beneficial financial ecosystem beneficial for traders and investors across the board.