- Gold recently hit an all-time high of $3,000 per ounce, showcasing its strength as a traditional safe haven during economic uncertainty and geopolitical tensions.
- Bitcoin’s recent performance has highlighted its volatility, raising questions about its role as a store of value compared to gold during periods of global economic instability.
- Despite short-term underperformance, Bitcoin retains characteristics of a store of value and may become increasingly scarce and valuable due to its capped supply of 21 million coins.
As global economies brace themselves for the potential impact of a trade war, investors are seeking safe haven in the time-tested store of value, gold. On March 14, Gold’s value per ounce hit its all-time highest of $3,000 per ounce. The precious metal has seen a significant spike as of late, gaining a 4.62% increase since the start of the month.
The recent gold rush isn’t limited to only investors, however. Last year we reported how BRICS nations were expanding their gold reserves, and just last month U.S. President Donald Trump visited Fort Knox to inspect America’s gold stash.
There is a likely scenario where the recent fears of a potential recession due to the U.S. pressuring trading partners for better trade deals may further drive global uncertainty, prompting central banks and investors to fortify their holdings in gold as a hedge against economic instability.
Why Gold is Beating Bitcoin in The Battle For Stores of Value
Bitcoin is often deemed the premier store of value in the digital asset realm. Given its strong use cases and scarcity, the world’s largest crypto is often viewed as a safe haven among more volatile cryptocurrencies in the market.
However, the recent gold spike raises the question: Why is Bitcoin underperforming against another store of value?
Since February 3rd when Bitcoin started underperforming against gold, there’s been hardly any competition. In that period, gold gained 8% in value while Bitcoin lost a whopping 18.11%.Â
While these results may seem disappointing for believers of the idea that Bitcoin is in fact a hedge against inflation, it’s important to note that comparing the two assets at this stage is not really fair.
Gold has been a longtime battle-tested hedge against inflation, serving as a safe haven during the last century’s economic hardships, and even as a de-facto currency before that. Meanwhile, Bitcoin is only 16 years old.
Sure, 16 y.o. may be old enough to get a driver’s license in the U.S. — but not old enough to grab a beer in most countries.Â
The digital asset still fits the characteristics of a store of value, but it may still need time to mature and gain trust amidst uncertain economic conditions. There’s even an argument to be made that in the long run, Bitcoin will become even more scarce than gold due to its limited 21 million coins, making it an increasingly valuable asset as demand grows and supply diminishes.
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