Category: Gold

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Bitcoin Crypto News Gold Market Analysis Markets

Gold Tanks as Bitcoin’s Price Soars

One of the most popular narratives surrounding bitcoin is that it is “digital gold”. At a time of unprecedented global fiscal and monetary expansion, one would have expected bitcoin’s physical counterpart to shine. Instead, it’s endured a rather torrid time that has left investors wondering whether it still has value in a diversified portfolio.

Switching the Physical for Digital

It’s well-documented by now that younger generations around the world are showing a distinct preference for all things digital. From India to Australia, millennials are choosing to invest in bitcoin over gold.

Gold has traditionally been considered a hedge against inflation, but over the past 18 months, gold bugs have had difficulty explaining its underperformance relative to almost all other assets, especially against bitcoin.

Gold price. Source: Goldprice.org

Bitcoin Priced in Gold

In considering the relative performance of bitcoin and gold, it is also useful to consider the performance of bitcoin priced in gold. Unfortunately for gold enthusiasts, this metric doesn’t paint a pretty picture either.

Bitcoin priced in gold. Source: Buybitcoinworldwide

Will Bitcoin Flip Gold?

With a current bitcoin price of US$43,121, bitcoin’s market cap is around US$809 billion. This is dwarfed by physical gold’s market cap, estimated to be around US$10 trillion. Commentators have long opined about when bitcoin would overtake gold’s market cap – the so-called “flippening”.

When will bitcoin flip gold? Source: Ecoinometrics

Based on the chart above, that may be out of reach for the foreseeable future, however given the surprises we’ve seen over the past 18 months, anything is possible.

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Australia Bitcoin Crypto News Gold

Aussie Finance Podcaster BIP Claims Bitcoin “Will Never Become a Store of Wealth”

In their most recent episode, BIP podcast hosts Paul Colgan and James Whelan of the VFS Group discussed crypto with Australian blockchain entrepreneur Sergei Sergienko. Much like Peter Schiff, it’s clear they aren’t keen on crypto.

Hosts Not Keen on Bitcoin

The hosts are self-described crypto sceptics and kicked off the episode by referring to crypto fanatics as “religious” and at times “unhinged” or “detached from reality”.

The episode covered the range of common arguments typically made against crypto:

  • It’s used for illicit activities: Unlike fiat, crypto is traceable on the blockchain. In 2020, chain analysis showed that 0.34 percent was used for illicit activity. The UN estimates between 2.5 – 5 percent of global GDP (between US$1.6 – $US4 trillion) is for illicit activity. In absolute and in relative terms, fiat accounts for far more illicit activities.
  • Governments can and do seize crypto assets: No one has the ability to confiscate your crypto provided you are in sole control of your private keys. As crypto investors will tell you – not your keys, not your coins. Leaving them in a public wallet such as an exchange or with a custodian is an example of you not controlling your keys.
  • Use of bitcoin for payment is extremely limited: To an extent it’s true, but not in El Salvador where it is legal tender. For now, as Bitcoin grows in value and in most countries is treated as an asset for tax purposes, it makes little sense to use it for day-to-day transactions. In Australia, the ATO treats Bitcoin as an asset, meaning you are obliged to pay capital gains tax on all individual bitcoin transactions if your exit price is higher than your base cost.

BIP Podcast Host: Bitcoin is Not a Store of Value

In simple terms, a store of value is defined as an asset that preserves its purchasing power over time. Traditionally, gold has fulfilled that role, but increasingly, millennials are switching gold for crypto, even in regions with strong patterns of gold ownership. It’s not surprising, given that over the past 10 years Bitcoin has comfortably outperformed gold.

Notwithstanding the data, Whelan of the BIP podcast saw the “calamity value of gold”, but not in Bitcoin. For that reason, he argues, Bitcoin will never be a store of value:

If everything stopped working and we had to actually go back to the barter system, it’s very handy to have gold in your safe, which is divisible and tradable. Whereas if nothing’s working … your Bitcoin wallet is effectively as useless as a doorstop.

Paul Whelan, BIP podcast

In order to shut down the Bitcoin network, you would need to shut down the internet and all connectivity. It’s difficult to imagine such circumstances, but in such event you may want to have a little gold on hand for the “zombie apocalypse”.

In all other cases, however, Bitcoin’s scarcity, supply inelasticity and exponential returns appear to provide a compelling case for Bitcoin over gold.

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Australia Crypto News Gold India Investing

Indians Switch Gold for Crypto – Crypto Investment Skyrockets 19,900% in a Year

In India, where well-to-do citizens own more than 25,000 tonnes of gold, investments in crypto mushroomed from about US$200 million to nearly US$40 billion in the past year, which translates to a massive 19,900% jump.

Entrepreneur Richi Sood, 32, is one of those Indian citizens to have pivoted from gold to crypto. Since December 2020, she’s invested US$13,400 into Bitcoin, Dogecoin and Ethereum.

Richi Sood

Sood’s timing has been fortuitous so far. She cashed out part of her position when Bitcoin broke through US$50,000 in February and then bought back in after the recent tumble.

I’d rather put my money in crypto than gold. Crypto is more transparent than gold or property and returns are more in a short period of time.

Indian entrepreneur, Richi Sood

Younger Cohort Cracks on to Crypto

Sood is just one of a growing cohort of Indians – now totalling more than 15 million – buying and selling digital coins. Much of the interest in India is centred on the 18-35 age group, says Sandeep Goenka, co-founder of India’s first cryptocurrency exchange.

They find it far easier to invest in crypto than gold because the process is very simple. You go online, you can buy crypto, you don’t have to verify it, unlike gold.

Sandeep Goenka, co-founder of ZebPay

India Mirrors Australian Crypto Trend

The crypto landscape in India mirrors the trend in Australia, where a survey earlier this year indicated investors were favouring cryptocurrencies over gold and expressing a high level of interest in crypto debit cards. As in India, younger people are also demonstrating the most enthusiasm for crypto, even favouring digital assets over real estate.

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Bitcoin Crypto News Gold

Data Shows Gold Consumes More Energy Than Bitcoin

In a white paper recently released by Galaxy Digital, a tech investment and research firm shows that Bitcoin’s annual energy consumption is considerably lower than that of gold and the largest players in the banking industry.

Bitcoin Production Uses Way Less Energy Than Gold Production

Auditing Bitcoin’s energy usage is quite simple compared to retrieving data for energy usage of the gold industry since this data is publicly disclosed.

Gold uses roughly 240.61 TWh/yr when using the standard conversion from GHG Emissions to kWh/yr using the global IEA carbon intensity multiplier. That’s just more than double that of Bitcoin, these estimates don’t include second order effects like production and discarding of vehicle tires and other materials used by the industry.

Total Emissions of Gold [Galaxy Digital]

Bitcoin Also Uses Less Energy Than Gold

Banking uses an estimated 263.72 TWh/yr. This includes energy used by banking data centres, bank branches, ATMs, and card network’s data centres, which is discussed in-depth in the report. A comprehensive number would require individual banks to self-report on their electricity usage.

Bitcoin uses an estimated 113.89TWh/yr which is considerably lower than that of both other industries.

Estimated Annual Electricity Consumption of the Bitcoin Network [Galaxy Digital]

Kathy Wood also recently stated that 50% of Chinese bitcoin mining initiatives use renewable sources of energy as well as the fact that many use offset electricity.

Just cleaning up our wastage could power the Bitcoin network. The authors found that the amount of energy lost in transmission and distribution is 19.4x that of the Bitcoin network according to data from World Bank and IEA.

Bitcoin and Ethereum Will (Eventually) Go Eco-Friendly

Most new technologies that have high energy consumption eventually turn more eco-friendly, and we are starting to see Bitcoin and Ethereum take steps towards this.

Ethereum 2.0 is switching from proof-of-work to proof-of-stake (mining to staking) to consume 99% less electricity. And we also see some Bitcoin mining operations switch to carbon neutral systems.

The recent price drop of Bitcoin was linked to Elon Musk’s debate with Michael Saylor about Bitcoin’s environmental impact. Hopefully, this is something cryptocurrencies can address in the near future.

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Bitcoin Crypto News Ethereum Gold

Bitcoin is a Store of Value, Ethereum is Powering the Crypto Economy

Bitcoin and Ethereum: The World’s Largest Cryptos

They are the King and Queen of the crypto market and for very good reasons, and can’t really be compared directly because they have very different uses cases – as explained below.

  • Bitcoin is a store of value asset
  • Ethereum is a framework powering crypto projects

Both BTC and ETH adoption is now going mainstream and it’s important that we understand the purpose of them so we don’t compare apples with oranges when deciding between them.

Bitcoin is a store of value asset

Bitcoin was originally designed to be a transactional peer-to-peer cash system as per Satoshi’s Bitcoin whitepaper. However, it has since been altered into a store of value as it cannot cope with the scaling of transactions as transaction fees soar.

Having a limited supply of 21 million Bitcoin on the BTC blockchain, and a decreasing supply – this makes it a scarce asset, and therefore, valuable to investors. Learn more about Bitcoin.

Investors worldwide have realised alternative Bitcoins store of value and been adding BTC to their personal portfolios, while institutions have been adding it to their balance sheets.

Ethereum is powering the crypto economy

Ethereum on the other hand, was developed to address the “flaws” of Bitcoin and has evolved dramatically over the past few years into “programmable money”, as per the Ethereum whitepaper.

Ethereum powers crypto projects and ecosystems:

Ethereum also is set to become a deflationary asset as it upgrades to Ethereum 2.0 hardfork in July 2021. This will see some Ether “burned” on every transaction, decreasing it’s supply.

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Bitcoin Crypto News Gold Oil

Bitcoin Outperformed Oil and Gold With Over 100% Increase in Q1 2021

Bitcoin Outperformed Oil, Gold With Over 100% Increase in Q1 2021

The price of Bitcoin (BTC), the leading cryptocurrency by market capitalization, has more than doubled since the beginning of the year.

This exponential increase is second to none in the institutional-grade assets class, hence, making the cryptocurrency the best performing asset in the first quarter of 2021 according to cryptocurrency market research platform Messari.

While BTC appreciated over the past three months, the precious metal gold plummeted in value within the same period. 

Bitcoin: The Best Performing Institutional Asset

Bitcoin was the best performing institutional-grade assets within Q1 of 2021, according to Messari researcher Mira Christanto. The cryptocurrency increased by 103 percent in value. Back in January, BTC was valued at around US$28,994. However, the price has surged to over US$59,000.

Within Q1 also, Oil increased by 26 percent, followed by Global Stocks (3 percent) and the USD (1 percent). The yellow metal was rated the institutional asset with the most significant loss. According to Messari, Investment Grade Bonds dropped by four percent in Q1, followed by Government Bonds, which fell by five percent. Gold declined by ten percent in value.

An ounce of gold was traded at nearly US$1,900 on 1 January 2021. However, the value has declined to US$1,707 at the time of writing.

Gold price [source: GoldPrice]

Institutions Bet on Bitcoin as a Better Asset

Since the outbreak of the coronavirus pandemic, many large companies began considering Bitcoin as a better store of value and inflation hedge. This includes the publicly-traded company MicroStrategy, MassMutual, Tesla, Square, and many other corporations. According to CoinGecko, there are 21 known public companies that have Bitcoin on their balance sheet. These institutional investments seem to have helped BTC maintaining an upward movement in value.

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Bitcoin Data Gold Market Analysis

Bitcoin’s Annual Growth Rate was 196% for Past 10 Years vs Gold, S&P 500 and Stocks

A chart published by Case Bitcoin shows Bitcoin’s 10-year Compound Annual Growth Rate (CAGR) is 196% compared to Gold which is only 2%.

The CAGR metric is calculated by taking an asset’s ROI between two dates, and works out the average compounded annual return.

Obviously the Bitcoin returns look staggering compared to the other markets as Bitcoin would have tripled your money every year since it was created.

The results are even more impressive when you compare the recent years due to the consistent returns even as the marketcap grows larger.

This shows bitcoin’s Compound Annual Growth Rate (CAGR) vs other assets over various timeframes. For example this is showing that bitcoin has returned 155% on average, every year, for the past 5 years, while gold has returned 7% on average each year over the same period.

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Australia Bitcoin Gold

Perth Mint Says Gold is Far More Decentralised Than Bitcoin

Australian bullion company Perth Mint, has stated in a recent report that they think the gold market is far more decentralized than Bitcoin.

The article, written by Jordan Eliseo – Manager Investment Research at Perth Mint, explains reasons why they think Gold is better than Bitcoin.

The gold market is far more decentralized, with the precious metal mined, refined, and owned by central banks, households and investors the world over. Bitcoin on the other hand is predominately held by a small group of owners, while mining is overwhelmingly concentrated in one country.

Perth Mint “Gold vs Bitcoin” article

Some key points in the article (with some commentary):

  • “Gold breaks its price correlation with Bitcoin – since August 2020 Bitcoin has been soaring, while Gold has declined.”
  • “Gold has a multi-millennia track record as a store of value and has been the best performing asset in equity market corrections over the past 50 years. In contrast, it is far too early to say that Bitcoin is a store of wealth.”
  • “Free storage options for gold can be much lower risk than free bitcoin storage options, given the counter-party risk inherent in the latter.” The free storage with Perth Mint is for “storage with the working inventory of the mint”.
  • “Gold is a lower cost investment than bitcoin, with gold ETPs like Perth Mint Gold (ASX:PMGOLD) offering gold exposure for 0.15% p.a., versus 1-2% p.a. for existing bitcoin products.” Bitcoin ETF EBIT is at 0.75% p.a.
  • “Gold’s network effect is far stronger than bitcoin’s, best evidenced by the perpetual marketing of bitcoin itself as digital gold. Gold is not marketed as analogue bitcoin!”
  • “there seems little compelling reason for institutional investors and large corporations to include bitcoin in diversified portfolios or on company balance sheets.” Many companies have already adding Bitcoin to their balance sheets. Large fund advisors such as Kevin O’Leary have publicly said that the reason they are holding a 3% allocation of BTC because it’s as a hedge against inflation. They also hold a basket of Fiat currencies, because they hedge against each other. He also said they he has owned Bitcoin for a long time but could not do or say anything due to regulations, and he believes with the introduction of the approved ETFs, these regulations are now being adopted by large investors.
  • “Bitcoin remains under threat, both from hard forks and corruptions of the bitcoin network itself, well as thousands of other cryptocurrencies.”
  • “By the end of 2015, more than 70% of all the bitcoin that will ever supposedly be issued had already been mined, and was held by a small group of people, before 99.9% of the world had ever heard of it”
  • “Research published by Glassnode in early 2021 suggest just 71% of bitcoin is controlled by the largest 2.1% of bitcoin network entities.”
  • “Bitcoin beats gold hands down from the perspective of generating speculative returns in rapid fashion — but it is 12 times more volatile than the precious metal.”
  • “Corruptions and or degradation of the Bitcoin network itself (for example, in 2010, someone altered the network and temporarily created more than 180 billion bitcoin, while there have been at least 40 bugs detected in its short lifespan). Gold on the other hand is not a piece of software. It is an inert physical metal. It will never evolve the way the Bitcoin network can and has. It will also never degrade.”
  • “The gold market is far more decentralized, with the precious metal mined, refined, and owned by central banks, households and investors the world over.” See video below for the debate between Bitcoin and Gold.

The Bitcoin vs Gold Debate

The debate between Bitcoin and Gold has been ongoing for quite a few years now with both having pros and cons. Bitcoin has been named “the digital gold” with investors large and small adding it to their portfolios.

For those of you that haven’t seen this debate between Peter Schiff and Erik Voorhees, it’s a great watch.

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Bitcoin Cryptocurrencies Gold

Satoshi’s Twitter May Have Been Found — As Well As A Clue For A Bitcoin Treasure Hunt

A researcher who goes by the name of Varun has published his findings on Substack, in which he claims the Twitter account ‘Goldlover’ (@fafcffacfff) may belong to the creator of Bitcoin himself. 

A Hankering For Gold Both Physical and Digital

According to the research, this Twitter account was at the peak of its activity around the time Bitcoin was released — and ceased nearly all activity at a time that concurs with the moment Satoshi slipped back into total silence, leaving the budding crypto community to its own devices.

Created in May of 2008, the account mentioned gold quite often and sharply criticized the current fiat value system. The account also allegedly mentioned “Bit Gold” several times — a possible reference to a proposal dating back to 2005 made by Nick Szabo, who laid out an idea for a financial system based on cryptography. The mining would, of course, be decentralised. 

In September of 2008, the Twitter account yet again began mentioning “Digital Gold Currency”, in between a great number of eccentric tweets about gold and jewellery. 

Although a great number of people were criticizing the financial system around 2008 for obvious reasons, this criticism coupled with the fact that this account is the only one to mention Bitcoin as far back as 2009 aside from Hal Finney’s account makes it a serious candidate for being Satoshi’s account.

“(These are) all hallmarks of talking points used by Satoshi in his emails and forum posts which are well known, post-Bitcoin announcement.”

This may not be, however, the most important tweet of his. There is a theory that alleges that Satoshi left clues that would point eager seekers to his fortune in Bitcoin, made back when mining BTC was quite easy. 

The following cryptic tweet may have just reinforced that theory:

So if you have a penchant for both symbolism and cryptography, start looking.

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Australia Bitcoin Crypto News Gold

Australia’s Newcrest Wants Crypto Investors to get Some Gold

Bullish: Bitcoin Miner Net Position Change Still Positive

As digital currencies continue to increase in value, they keep attracting the attention of many investors, than in other traditional assets. One of the executives at the Australian largest gold mining company, Newcrest, opined today that the growing value of cryptocurrencies should be the more reason investors should consider having other assets like Gold. This statement comes due to the high volatility of cryptocurrencies like Bitcoin (BTC).

Newcrest Suggests you Should Hold Some Gold

The largest cryptocurrency, for instance, has surged significantly since the start of the year. Just some days ago, BTC reached another all-time high (ATH) in value at over US$47,000. Other popular alternative coins like Ether (ETH), Polkadot (DOT), Binance Coin (BNB), etc., reached a new high in market value this year. However, these cryptocurrencies are all trading slightly below the ATH price.

But as the cryptocurrency market keeps growing, Sandeep Biswas, the CEO of Newcrest Mining Ltd, told Bloomberg TV that digital currency investors should consider getting some of the age-old haven assets to protect their capital/profit from the high volatility in cryptocurrencies. “If you’re into cryptos, you want to consider having some gold. […] “may act as a bit of a hedge against the volatility of cryptos,” Biswas commented.

The CEO added that Gold is a different class of investment from cryptocurrencies and would benefit investors since it’s a more stable asset. “It’s a tangible asset: you can see it, you can touch it, you can feel it, you can mold it, you can make it into jewelry, whatever you want,” he further noted.

Crypto and Gold can Co-exist

Biswas’ statement somewhat indicates that cryptocurrencies can co-exist with Gold. Many people think that the growth in the crypto market might pinch demand from Gold. However, companies like Goldman Sachs Group Inc. had noted that the traditional assets would continue to maintain their stand in the market. At press time, Bitcoin was trading at US$45,125 on Coinmarketcap, while an ounce of Gold traded at US$1,850.