Is Bitcoin “digital gold”?

Satoshi Nakamoto saw bitcoin with a full -fledged payment tool, deprived of the flaws of fiat money. The main one is inflation, that is, a gradual loss of real value, expressed in purchasing power.

To resist this, the following properties are laid in the architecture of Bitcoin:

• The issue is limited to 21 million BTC. Miners will get the last coin in the fall of 2140.
• The volume of production of new coins is reduced. As a result of a programmed event known as halving, Bitcoin mining rewards are half as much as about every four years.

Gold has similar characteristics. Since this is a natural metal, its stocks are limited. And although the volume of production of this resource is growing, it does not have time for the growth of demand, and new deposits are found less and less.

Finally, as in the case of Bitcoin, humanity voluntarily recognized the gold with a valuable asset that bears value.

According to the testimonies left by Satoshi Nakamoto himself, Bitcoin was created in response to the 2007 crisis, which the United States “extinguished” using a large -scale additional issue of the dollar. Since the launch of the main cryptocurrency network, its price has consistently grew from year to year. But at shorter intervals of the time, bitcoin is a volatile asset. This is related to him with high -risk assets.

Various researchers have repeatedly found a correlation between bitcoin and the stock market. In April 2022, Arcane Research said that the movement of the first cryptocurrency was closest to the shares of technological companies, which are considered a more risky segment of the stock market.

A few months before, Goldman Sachs analysts warned that the price of bitcoin depends on macroeconomic factors and that its cost may fall due to tightening the Fed Policy. This is what happened later.

According to Bank of America, since 2021, the price of the first cryptocurrency correlates with the shares market. As an example, the bank researchers gave an example a correlation with key stock indices – S&P 500 and NASDAQ 100. Therefore, bitcoin is not a protective asset, confident in the bank.

What are the arguments in favor of the thesis about digital gold?

There are also arguments that speak in favor of bitcoin as a means of maintaining value.

Firstly, famous investors spoke about the protective properties of bitcoin. The thesis of “digital gold” in 2021 was supported by American financier Ray Dalio, although he later noted that the first cryptocurrency loses gold.

In April 2022, the former head of the BitMEX exchange Arthur Hayes expressed the opinion that Bitcoin will ultimately become a protective asset due to the Fed’s policy and the depreciation of the dollar.

Secondly, the study conducted by Forklog showed that during the 2020 crisis, the first cryptocurrency correlated mainly with precious metal.

Thirdly, bitcoin can change correlation with various classes of assets, depending on the situation in the market. The opinion that the cost of the first cryptocurrency begins to coincide by behavior with risky assets during the fall of the markets, in 2020, the researcher of The Block Larry Chermak expressed.

Another argument “For” is the actual use of bitcoin as digital gold. Despite its high volatility, a number of large companies are already storing in the first cryptocurrency. According to Bitcoin Treasuries, among them are Tesla, Core Scientific and Square.

One of the main supporters of Bitcoin as a protective asset is Microstrategy CEO Michael Saylor – his company owns almost 130,000 BTC.

In addition, bitcoin is already used in state reserves. Since 2021, Bitcoin’s purchase has been conducted by the Salvador government.

JPMorgan believes that Bitcoin has the potential to become digital gold due to adoption in such a status among institutional investors, but the achievement of this goal restrains the dependence of the first cryptocurrency on inflation.