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Bitcoin’s appeal as an alternative store of valuable assets is strengthening, according to analysts from German investment bank Deutsche Bank.
“There seems to be a growing demand for using bitcoin where gold was being used to hedge dollar risk, inflation and other things,” said Jim Reid, chief executive, chief of global fundamental credit strategy, according to ZeroHedge.
Bitcoin has long been regarded by advocates as digital gold, due to its limited and predictable supply and use case as a store of value outside of banking influence.
While bitcoin gained 144% this year, gold was up 22%. Both assets appear to have benefited from the monetary and fiscal policies of increasing inflation launched by central banks and governments around the world to contain the economic fallout of the coronavirus pandemic.
The cryptocurrency has risen by more than 25% this month alone, despite hopes of a rapid global economic recovery over potential coronavirus vaccines and better risk appetite in equity markets. Gold, however, lived up to its reputation as a safe haven, falling 1% so far this month.
The divergence between gold and silver on the one hand and bitcoin on the other is one of the oddities this month, according to Reid. US drug companies Pfizer and Moderna announced encouraging results for their experimental coronavirus vaccines earlier this month, triggering a rotation of money from gold and other safe-haven and venture assets.
Reid told Bloomberg earlier this month that coronavirus vaccines are equivalent to global fiscal stimulus. Christian Nolting, Global Chief Investment Officer at Deutsche Bank Wealth Management, said inflation could rise moderately in 2021 and 2022, bidding well for stocks and gold.
As of press time, bitcoin is trading close to $ 17,550, while gold is trading hands at $ 1,860 an ounce.
