Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
The rise of cryptocurrencies has sparked an ongoing debate between Bitcoin and gold as safe-haven assets. That conversation has only intensified as investors prioritize wealth preservation amidst extreme market volatility and uncertainty. The World Gold Council (WGC) is the latest authority to push back against the comparison of Bitcoin as “digital gold”, pointing to the digital coin’s volatility, and speculative nature.
The Numbers
- 195 countries have gold reserves, despite operating on fiat currency systems.
- Zero central banks have adopted Bitcoin as part of their official reserves.
- Collectively, governments hold 32,000 tons of gold.
- Central bank gold demand broke records in 2022, 2023, and H1 of 2024.
- Bitcoin’s average daily volatility is around four times higher than gold’s.
Why Investors Should Care
Many people automatically assume Bitcoin achieves the same or even better inflation-hedge protection than the yellow metal. Often, this assumption is based solely on Bitcoin’s dramatic price movements rather than a thorough analysis of the underlying performance. The WGC’s in-depth study reveals that investors may be exposing their hard-earned money to significant risk by favoring Bitcoin over gold for long-term stability and protection against economic pressures.
Market Impact
Analysts at the WGC compared the performances of Bitcoin and gold through bouts of economic downturn. Their study revealed that gold’s daily average volatility (measured over 5 years) is a minor 15% while Bitcoin’s sits near a staggering 60%.
Source: World Gold Council
Additionally, researchers found that Bitcoin had a positive correlation with the stock market between August 2019 and August 2024 – the opposite of what a safe-haven asset is supposed to do.
Sources: Bloomberg, World Gold Council
Expert Insights
Joseph Cavatoni and John Reade, Senior Market Strategists at the World Gold Council, emphasized, “Gold has long demonstrated its role as a safe haven asset, which is supported through clear use cases by central banks, long-term investment holdings and global savings.”
On the flipside, the duo continues, “Bitcoin has not demonstrated the same characteristics as gold during significant market drawdowns.”
They conclude by saying, “[G]old and Bitcoin…serve fundamentally different purposes in investment strategies.”
JP Morgan CEO Jamie Dimon has aired his more pessimistic views about the cryptocurrency, calling it a “Ponzi scheme” and a “fraud” that has “no hope.”
Eric Sepanek, the founder of Scottsdale Bullion & Coin, highlights that “People buy gold for security…[because it’s] always been a reliable store of value.”
In comparison to Bitcoin and other assets, “Gold and silver are going to be better stores of value for what we’re about to go through.”
What’s Behind the News?
The conflation between Bitcoin and gold has gained significant traction over the years as cryptocurrencies have recorded impressive gains, usually followed by equal or larger losses. The comparison is heating up as economic uncertainty mounts, prompting investors to look for a safe place to park their wealth. Various researchers and market experts are pushing back against Bitcoin’s status as “digital gold” given its comparatively unreliable performance.
Future Outlook
Bitcoin’s volatility and speculative nature result in schizophrenic price forecasts with some investors predicting a $1 million Bitcoin and others warning of an imminent crash to zero.
The fundamentals behind gold lead to a much broader consensus as Wall Street, major financial institutions, and central banks predict higher prices.
Following gold’s record-setting rally, experts started increasing their price predictions for this year and beyond.
This anticipated surge in gold prices is due to inflationary pressures, worsening geopolitical threats, and increasing economic uncertainty, highlighting gold’s status as the go-to safe-haven asset.
Actionable Takeaways
- Match Investments With Goals — Gold and Bitcoin have different investment purposes that investors should consider in line with their financial goals.
- Prioritize Physical Gold – Central banks and retail investors are diving into physical gold – as opposed to paper gold – because of its inherent value and physical nature.
- Talk With an Advisor – Consult a financial advisor to tailor your investment strategy based on your risk tolerance and long-term financial goals.
👉 Related Read: Why Investing in Gold & Silver is NOT a Cookie-Cutter Approach
Want to Learn More About Gold?
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